[Chuckmak]

...mild? yeah right.

OECD sees "mild" economic slowdown

$this->bbcode_second_pass_quote('', '
')The US housing downturn will provoke a “mild” but short-lived world economic slowdown next year, the Paris-based Organisation for Economic and Co-Operation said on Tuesday, as it downgraded its growth forecast for the world’s wealthiest nations.

In its twice-yearly Economic Outlook, the organisation charged with improving the economic prospects of its 30 member states, said it now expected growth of 2.5 per cent in the OECD area, down 0.4 percentage points from its May projection, but forecast a bounce back to 2.7 per cent in 2008.

Jean-Philippe Cotis, chief economist said: “Rather than a major slowdown, what the world economy may be facing is a rebalancing of growth across OECD regions.” As economic growth in the US and Japan slowed, “a solid upswing may be underway” in the eurozone. But initially this rebalancing “would not be strong enough to prevent a mild and short-lived weakening in 2007 in the OECD area” he said.

While the OECD slashed its US forecast to 2.4 per cent in 2007 from May’s 3.1 per cent, it raised the outlook for the eurozone but by just 0.1 points to 2.2 per cent. Japan, the UK and Canada were among those downgraded, but the outlook for Germany and Italy improved.

Mr Cotis said the US had suffered a higher inflation shock than the OECD average because of its greater energy intensity but suggested that a mild economic slowdown could mean there was no need for the Federal Reserve to raise interest rates again. However, it warned that: “if risks of higher inflation outturns materialise in the near term, the need for an initial further tightening of monetary policy cannot be ruled out.”

The OECD cautioned against another interest rate rise in Japan because “deflation is not over yet” and the “the return to price stability is proving longer and less assured than expected.” But it advised the European Central Bank to raise interest rates further. “The recovery now seems sufficiently robust to justify some additional withdrawal of monetary stimulus,” according to the report.

The OECD warned once again of the risk to advanced economies of over-valued housing markets. “Prices may now have reached unsustainable highs in certain countries, notably the US, Denmark, France and Spain,” according to the OECD’s analysis. Although “history suggests that sharp housing corrections can be hard to contain,” the OECD was hopeful of gentle slowdown for the US housing market, partly because households seemed prepared well enough to cope with a downturn.

In a special chapter on the sharp rise in household indebtedness – mainly mortgages – in many countries over the past decade, the OECD found that some low-income households were vulnerable but that “household balance sheets are generally sound and debt servicing burdens still moderate.”

[Kingcoal]

It depends on how you define mild. Will things get better for those who are struggling now? No, things will get worse and for those who are living paycheck to paycheck, they might get a lot worse. For those who are now doing well, will things get a lot worse? No, it will be business as usual with some minor hiccups. In other words, it's now good to be in the top 20 percentile and it will continue to be good to be there.

[Concerned]

$this->bbcode_second_pass_quote('Kingcoal', 'I')t depends on how you define mild. Will things get better for those who are struggling now? No, things will get worse and for those who are living paycheck to paycheck, they might get a lot worse. For those who are now doing well, will things get a lot worse? No, it will be business as usual with some minor hiccups. In other words, it's now good to be in the top 20 percentile and it will continue to be good to be there.

[Zardoz]

Keep smiling:

Cracks showing in three of economy’s pillars

Don't worry about a thing. We're fine here.

[Armageddon]

showed surprising cracks on Tuesday

==================================

Suprised by who ? Not me

[Concerned]

$this->bbcode_second_pass_quote('armegeddon', 's')howed surprising cracks on Tuesday

[Bas]

interestingly the OECD doesn't see America as the economic engine the world relies on anymore. Europe and emerging Asia can pull the cart now when America needs to rest...which is a good thing for all IMO