AP: Downturn gains steam as inflation roars ahead

[marmar]

via Yahoo!:



Downturn gains steam as inflation roars ahead
Tuesday July 15, 6:11 pm ET
By Martin Crutsinger and Jeannine Aversa, AP Economics Writers
Inflation rises at fastest pace since early 1980s as Fed chair warns of more trouble


WASHINGTON (AP) -- The U.S. economic downturn gained steam Tuesday, with a report of the highest inflation since the early 1980s, more bad news for banks and automakers and a suggestion by the Federal Reserve chief that worse days are ahead.

President Bush sought to bolster confidence by declaring that the financial system was "basically sound," but he conceded: "It's been a difficult time for many American families."

The Labor Department said wholesale inflation, driven by skyrocketing gas and food costs, rose by 9.2 percent for the 12 months ending in June -- the fastest pace since the summer of 1981, during another energy crunch.

At the same time, consumers hit the brakes hard despite a massive infusion of government stimulus checks. Retail sales turned in their poorest showing in four months.

Federal Reserve Chairman Ben Bernanke delivered a somber midyear outlook to Congress, saying the U.S. faces "numerous difficulties" despite the Fed's interest rate-cutting campaign, which began last September in hopes of preventing a recession.

Bernanke said the Fed expected the economy to grow for the rest of this year "appreciably below its trend rate." He cautioned inflation was likely to move "temporarily higher" in the near future.

That puts the Fed in a bind: Rising inflation hamstrings the Fed from cutting interest rates to jump-start the economy. The Fed had already signaled last month the rate cuts were probably at an end.

Outside Washington, there was plenty more bad news. On Wall Street, the Dow Jones industrials closed below 11,000 for the first time in two years, and shares of troubled mortgage giants Fannie Mae and Freddie Mac tumbled again. Fannie shed 27.3 percent and Freddie lost 26 percent.

In Los Angeles, police had to order people lined up outside an IndyMac Bank branch to remain calm or face arrest as they tried to pull out their money on the second day of the failed institution's federal takeover. ......(more)

The complete piece is at: http://biz.yahoo.com/ap/080715/economy.html

[blue sky at night]

1. I can only offer these words of hope...

remember; for the most part GAYS can't marry, and we have that going for us....plus guns are fucking everywhere! An officer lost his life here making a routine traffic stop on Sunday Morning, asshole shot him four times!

[msongs]

2. will be nice to see savings interest rates rise n people might actually save nt

[SpiralHawk]

3. "But on the bright side, profits are WAY up for republicon oil & munitons cronies." - Commander AWOL

[Rex]

4. Massive infusion? 600 bucks? You've got to be fucking kidding me.

This is what happens when you let idiots run the country. :eyes: I could do better. That is an insult lurkers.