Fed Says Economy Has Lost Momentum

Separately on Wednesday, more big banks reported losses and said people were having trouble making payments for everything from credit cards to cars. Stocks were mostly down for the day, the Dow Jones industrial average declining 34.95 points, or 0.28 per cent. The Fed report was the unwelcome icing on a recent batch of economic indicators - ranging from a plunge in retail sales to a big jump in unemployment - raising concern that the country is heading for its first recession since 2001. At the beginning of last year, many economists put the chance of a recession at less than 1-in-3; now an increasing number say 50-50 or even worse. Goldman Sachs, the biggest investment bank on Wall Street, thinks a recession is inevitable this year. The Fed report said the economy did grow during the survey period - from the middle of November through December - but more slowly than during the late fall. Credit problems intensified in December as did troubles in the housing market. That threw Wall Street into new turbulence. The economy probably grew at a feeble pace of about 1.5 per cent or less in the final three months of last year and will stay weak in the first quarter of this year as consumers - major shapers of the nation's economic health - tighten their belts. ... http://www.canadianbusiness.com/markets/headline_news/article.jsp?content=b0116166A

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