China’s leaders call for “stable growth” as economy slows

By: John Chan

Source: Global Research

http://www.globalresearch.ca/index.php?context=va&aid=32278

The Chinese Communist Party (CCP) regime has signalled a return to stimulus measures because of sharply decelerating growth and potential social unrest. A CCP Politburo meeting last week called for stable growth to be the top priority.

“The ongoing pace of economic growth is within expectations, but the external environment remains grim and poses difficulties and challenges,” the official Xinhua news agency reported the Politburo discussions as stating.

The Politburo reiterated the need for “prudent” monetary and “proactive” fiscal policies. In other words, Beijing will try to stem a six-quarter slowdown in the world’s second largest economy by boosting bank credit and implementing further stimulus measures.

Underscoring the worsening economic situation, Premier Wen Jiabao told a meeting of business leaders and academics in late July: “We must see with a clear mind that there are difficulties and risks in the current economic situation that can’t be underestimated.”

President Hu Jintao warned that rising unemployment could trigger social unrest. He said China would try to diversify export markets and “expand and stabilise” employment.

The country’s economic growth for the second quarter fell to an annualised 7.6 percent, the slowest rate in three years. However, this official figure is optimistic and the actual situation could be far worse (See: “Economic downturn in China worse than official data”).

The deepening debt crisis in Europe and its broader international impact has reduced demand for China’s exports, which remain the economy’s main driving force. According to China Custom, in the first half of the year, exports to the European Union were $163.06 billion—a decline by 0.8 percent from the corresponding period last year. Exports to Germany declined for four consecutive months, France for three consecutive months and Italy for 10 months.

These figures translated into weakening industrial output. On August 1, the official purchasing managers index (PMI), released by the National Statistics Bureau, dropped to 50.1, its lowest level in eight months. It was just above the 50 mark, which indicates expansion.

Two days later came the publication of the official non-manufacturing index, based on a survey of about 1,200 companies in 27 industries, including telecommunications, transportation and construction. It slipped from 56.7 to 55.6 in July. The service sector makes up 43 percent of China’s economy, compared to 90 percent in the US. The contracting trend indicated that Beijing’s hopes of expanding the domestic market to make up for a slowing manufacturing sector is yielding few results.

The Chinese central bank has cut interest rates twice since June and reduced the reserve requirements for banks three times since November in a bid to encourage lending. The state planning commission has sped up approval of investment projects and boosted railway spending to counter the decelerating growth.

The China Security Journal reported last week that local bank branches were instructed to provide credit support to provincial level government-owned entities in 100 better-off counties, to build roads, railways, natural gas and clean energy projects. Some cities are also increasing stimulus efforts, with Changsha last month announcing an 829 billion yuan ($US130 billion) investment plan.

Relaxing lending to local governments is part of Beijing’s emphasis on “stable growth.” However, cheap credit will worsen the debt crisis facing local governments that are still struggling with huge debts resulting from the last stimulus package. Local government debt was estimated at 10.7 trillion yuan or $1.7 trillion in 2010, but analysts say this is an underestimation.

In a report released on August 3, London-based Capital Economics warned that new local government stimulus measures, from Nanjing and Jiangsu to Changsha and Hunan, could already total 4 trillion yuan, including tax cuts, consumption subsidies and infrastructure investment. The report warned that the 2008-09 stimulus program had “aggravated domestic imbalances in the economy,” leaving investment’s share of gross domestic product close to 50 percent—“one of the highest levels ever recorded for a major economy during peacetime.”

Far from resolving the “imbalance,” the push to stimulate growth with further investment will exacerbate the contradiction. Expanding domestic consumption would involve a significant increase in wages and living standards, which is unacceptable to the corporate elite.

The labour market contracted noticeably in the second quarter, particularly in the more economically developed eastern provinces. A Ministry of Human Resources and Social Security survey found that the number of job applicants in China’s eastern region increased by 132,000 in the second quarter, compared with the first quarter, while job vacancies increased by just 5,000.

While Chinese authorities still insist there is an “over-supply” of jobs, not workers, the survey revealed the opposite. Workers in the coastal provinces continue to lose their jobs as the manufacturing sector is hit by falling export orders.

In Zhejiang province, small and medium sized factories are being forced to scale back their workforces. In the first half of the year, the province’s exports increased by just 5.2 percent—compared to 22.3 percent in the corresponding period last year. In Wenzhou alone, 140 firms have shut and one fifth of industrial enterprises with annual revenues near $3 million yuan have experienced losses.

Zhejiang Wenzhou Apparel Association vice chairman Cai Huantian told the China Security Journal in late July that the business environment was worse than during the 2008 financial crisis. “The number of orders has fallen by around 30 percent from the same period last year, and the average volume of a single order has declined by 70 percent,” he said.

Japanese companies' confidence falls

Toyota Motor Corp. reduced production in October as government's stimulus programs ended, file photo

Source: Press TV
http://www.presstv.ir/detail/155519.html


Confidence among Japanese manufacturers has worsened for the first time since the end of the global economic downturn last year, a Bank of Japan survey showed.

According to the survey, which was released on Wednesday, the index of confidence at large manufacturers has undergone a fall since December and is expected to deteriorate over the next three months.

The index showed a dip from 8 in September to 5 in December and is expected to plunge to a new low of minus 2 in March, making companies more cautious about business conditions.

The decline is due to a slowdown in exports and also the government's failure in resuming stimulus programs. Meanwhile it is difficult to measure the level of domestic demand.

The government's subsidy program to buy fuel-efficient cars ended in September, forcing companies including Toyota Motor Corp. to reduce production in October.

"The outlook for big firms and manufacturers felt a little weak," Reuters quoted Yoshiki Shinke, senior economist at Dai-Ichi Life Research Institute, as saying.

"The BOJ ( Bank of Japan) is likely to stick with its current status for a while ... Rather than economic indexes, the trigger (for further easing) is likely to come from the market, such as stocks falling greatly or the yen strengthening even more due to overseas events," he added.

The authorities at the Bank of Japan are planning to examine the survey next week, but the central bank has delayed making improvements in its monetary policies to lessen the problem.

US private sector cuts 10,000 jobs

The August private sector layoffs the worst in the past seven months


Source: Press TV
http://www.presstv.ir/detail/140906.html


The private sector in the United States has cut 10,000 jobs in August to underscore a weakening labor market, the ADP Employer Services says.

The drop last month represented the first monthly decline since last December, while it failed to meet economists' estimates that recruiting would edge higher.

Most experts had predicted 13,000 jobs to be created.

"The decline in private employment in August confirms a pause in the recovery already evident in other economic data," ADP said, AFP reported.

"The deceleration in employment was evident in the major sectors and by size of business."

ADP said over those six months, from February to July, the monthly gain in employment on average was 37,000 with no indication of acceleration.

"Today's report brings clearly disappointing news for the labor market," said Natixis analyst Thomas Julien.

The data provided by ADP is closely monitored as a foreshadower of Friday's government non-farm payrolls figures, which are expected to show that the US economy axed 131,000 workers.

It, however, is expected to show an increase of 42,000 employees in the private sector.

Euro jobless rate glued at 10 percent

Eurozone unemployment has been unchanged since March


Source: Press TV
http://www.presstv.ir/detail/140839.html


The unemployment rate across the eurozone has remained at a record rate of 10 percent in July for the fifth month running, official figures show.

According to European Union data (Eurostat) released on Tuesday, some 15.8 million people within the 16-nation eurozone were jobless in July as the eurozone unemployment rate remains at its highest level since the euro's virtual birth in 1999.

Although the overall unemployment for the eurozone remained flat, the situation differed from country to country.

Germany, Austria and Malta recorded declines in their unemployment rates compared to a year earlier, while Spain retained the bloc's highest jobless rate of 20.3 percent, seasonally-adjusted Eurostat figures showed.

Throughout the wider 27-nation EU the rate also remained unchanged at 9.6 percent, which amounts to more than 23 million unemployed in July.

Eurostat also said Tuesday that the currency zone's annual inflation rate plunged in August, suggesting that the European Central Bank has plenty of room to continue its ultra-loose monetary policy.

Data show the inflation rate for the 16 countries that share the euro eased to 1.6% in August from 1.7% in July.

US stocks fall over growth concerns

US stocks have once again plunged amid new fears of a
double-dip recession

Source: Press TV
http://www.presstv.ir/detail/140689.html

US stocks have plunged with a triple-digit point decline as investors lost confidence over figures showing a slowdown in the country's economic recovery.

The Dow Jones Industrial Average dropped 141 points at closing on Monday. The Nasdaq Composite also fell 33.66 points, or 1.56 percent, to 2,119.97. The technology-heavy index has so far dropped 6% this month.

Concerns have also increased as a series of gloomy reports, due to be released later this week, are expected to show that the US economic recovery is slowing down in the second half of the year.

Shares fell further after US President Barack Obama failed to address economic concerns. In a recent speech, he said that he and his economic team had looked at ways to reinforce the economic recovery, including tax cuts for businesses, but did not provide an action plan.

The new discouraging data adds to August losses, with one trading session left in the month.

Last week, US stocks fell sharply as fears grew over the recovery of the world's leading economy, after a report showed a considerable drop in existing homes sales.

The moves came after the US National Association of Realtors reported a 27 percent month-on-month drop in existing homes sales to their lowest level in 15 years in July.

Bank of Japan holds emergency meeting

A security guard is seen through a link in a chain fence outside the
Bank of Japan building in Tokyo


Source: Press TV
http://www.presstv.ir/detail/140558.html


The Bank of Japan is holding an emergency meeting to decide on easing monetary policy in an effort to curb a surging yen amid mounting political pressure.

"Today... the chairman of the Policy Board decided to call an unscheduled monetary policy meeting," Japan's central bank said in a statement on Monday.

The strength of the Japanese currency has battered the country's already fragile economy as political pressure is mounting on the bank to ease its monetary policy.

The news sent Japanese stocks soaring, with the Nikkei 225 stock average rising by 3.1 percent to stand at 9,265.39 points.

The government usually doesn't intervene in foreign exchange markets, but Japanese Prime Minister Naoto Kan has warned that Tokyo will take decisive action when necessary.

Kan's economic team is expected to hold another meeting on Monday to decide the basic thrust of steps to help the fragile economy.

The rise in the yen has hurt Japan's export-driven economy, making Japanese products more expensive aboard.

It is also threatening to delay the country's exit from deflation. The yen hit a fresh 15-year high against the dollar last week.

40 Million Americans live on food stamps

Source: Press TV
http://www.presstv.ir/detail/140656.html


record number of people are living on government handouts in the US, as one out of six Americans now gets various anti-poverty supports, including food stamps.

A survey of state data by daily USA TODAY released on Monday showed that more than 50 million Americans are on Medicaid -- the federal-state program designed mainly to help the poor. That is an increase of at least 17 percent from December 2007, when the economic recession started.

"Virtually every Medicaid director in the country would say that their current enrollment is the highest on record," said Vernon Smith of Health Management Associates.

Government data for May indicates that the number of the people getting food stamps has surged to 40 million, a rise of almost 50 percent during the economic downturn.

Compared with 2007, nearly 10 million receive unemployment insurance, which shows a 4 percent rise.

Meanwhile the number of the people who are on welfare program has grown to 4.4 million, an 18 percent increase during the recession.

According to the report, the steady growth in safety-net programs is mainly due to the recession that has increased the number of the people who are qualified to get support under existing rules.

Economists divided over US Fed policy

Source: Press TV
http://www.presstv.ir/detail/140634.html


The latest survey by National Association for Business Economics reflect a division between economists over ways the US government should stimulate the economy.

In the NABE's semiannual survey in August, 60 percent of economists surveyed believed that the US economy is threatened by deflation in the short run and inflation in the long run.

Concerning fiscal policy, the respondents said the federal government should take action to promote employment growth before reducing the US deficit, Market Watch reported on Monday.

Analysts say the low pace of growth means unemployment will cloud over the US economy well through 2011.

A relative majority of the respondents supported extending individual income-tax cuts, enacted under President George W. Bush, which is scheduled to expire at the end of the year.

Meanwhile, about a third of the respondents were in favor of expiring tax cuts on higher-income individuals and households.

Latest data painted a grim picture for the US economy in the months to come.

Gross Domestic Product (GDP) grew at a smaller-than-expected 1.6 percent rate from April to June. Moreover, unemployment rate remains at almost 10 percent, home sales are plummeting and consumers are spending less.

Pressure to Close Anglo Irish Bank

Source: Press TV
http://www.presstv.ir/detail/140701.html


The Irish government signaled on Monday that gradually winding down Anglo Irish Bank could be an option as political pressure mounts on Prime Minister Brian Cowen to deal with a national millstone.

Propping up Anglo Irish left Ireland with the biggest budget deficit in the European Union last year.

With the costs continuing to climb and no final bill in sight, the premium investors demand to hold 10-year Irish bonds rather than Bunds neared record highs again on Monday.

"What we are not saying is that there can be an immediate shutdown of Anglo, that is still by far the most expensive option," Green Party Chairman Boyle told public radio RTE.

Anglo Irish is moving half its loan book to Ireland's state "bad bank" scheme, the National Asset Management Agency (NAMA).

"Management in Anglo Irish is both trying to cooperate with NAMA and promote this idea of a good bank which I think is dividing their attentions," Boyle said.

Ireland should collaborate with the European Commission and the European Central Bank to make sure a wind-down of Anglo would not endanger other Irish banks and the ability of Ireland itself to borrow.

US on verge of yet another recession?

Source: Press TV
http://www.presstv.ir/detail/140132.html


The US economy may be on the verge of yet another recession as the government Wednesday announced a decline in manufacturing activity and the weakest rate of new home purchases in almost 50 years.


Earlier this week, it was announced that sales of previously occupied homes fell last month to the lowest level in 15 years.

Meanwhile, unemployment remains near double digits because job growth in the private sector has slowed, AP reported.

Economists are predicting the government will announce Friday that the economy grew from April to June even more slowly than previously thought, at an annual rate below 2 percent - weak for normal times and especially anemic right after a recession.

"The odds of a double-dip are rising and uncomfortably high," said Mark Zandi, chief economist at Moody's Analytics, referring to the possibility that the nation will tip back into recession. "Nothing else can go wrong. There is no cushion left."

Housing has never fully recovered from the recession. Builders have been forced to compete with foreclosed properties offered at sharply lower prices.

According to government figures, in July the sales of new homes fell 12.4 percent in compared to a month earlier to a seasonally adjusted annual sales pace of 276,000, marking a drastic decline from the annual sale of nearly 600,000 new homes from 1983 through 2007.

The July pace was the slowest in at least 47 years. The past three months have been the worst on record.

Weak housing sales spell fewer jobs in the construction industry, which normally powers economic recoveries. On average, each new home built creates the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

The industry received some help in the spring when the government offered tax credits to homebuyers. However, since the tax incentives expired in April, the number of people looking to buy homes has dropped, even with bargain prices and the lowest mortgage rates in decades.

For the average US household the rate of economic growth may not matter much. The two indicators that do matter are the unemployment rate, stuck at 9.5 percent, and home values, which have sunk about 30 percent from their 2006 peak.

Der Spiegel: US middle class vanishing

This file photo shows members of a group called 'The Other 95 Percent' hold
a rally to thank US President Barack Obama for their middle class tax cuts as a
counter-protest to anti-tax groups rallying on the National Mall in Washington April 15, 2010


Source: Press TV
http://www.presstv.ir/detail/139522.html


The American middle class is on the verge of disappearing, while the United States, itself, is in danger of becoming a third world country, a leading German newspaper says.

According to an article appearing in the German newspaper, Der Spiegel, the negative consequences of the global financial crisis include a widened social class rift and the elimination of the middle class in the US.

The article states that many Americans are beginning to realize that the American Dream has now become a nightmare as people are having to face the bitter reality of a shrinking job market along with decades of stagnating wages and dramatic increases in inequality.

More than a year after the official end of the recession, the overall unemployment rate remains consistently above 9.5 percent. But this is just the official figure. When adjusted to include the people who have already given up looking for work -- or are barely surviving on the few hundred dollars they earn with a part-time job and having to use their savings to supplement their income -- the real unemployment figure jumps to more than 17 percent.

In its current annual report, the US Department of Agriculture notes that "food insecurity" is on the rise, and that 50 million Americans were unable to buy enough food to remain healthy at some point last year. One out of every eight American adults and one out of four children now survive on government food stamps. These are unbelievable numbers for the world's richest nation

Last week, leading online columnist Arianna Huffington issued the almost apocalyptic warning that “America is in danger of becoming a Third World country.”

In a recent cover story titled “So Long, Middle Class," the New York Post presented its readers with “25 statistics that prove that the middle class is being systematically wiped out of existence in America.”

Los Angeles protests massive layoffs

Source: Press TV
http://www.presstv.ir/detail.aspx?id=138685§ionid=3510203


Union members and government workers have launched a demonstration in the US state of California, expressing their anger at the increasing number of layoffs.

The labor rally on Friday took place on the south lawn at Los Angeles City Hall, a Press TV correspondent reported.

According to the data provided by the California's Finance Department, the golden state lost nearly 900,000 jobs between 2008 and 2009.

The massive job loss is taking its first victims from among those on the Californian government pay roll, with their annual income depleting to a level unprecedented since after World War II.

"We're already really stressed, working so much overtime it's incredible,” a government employee told Press TV.

Mort Levi, another government worker, said the excessive layoffs are putting a strain on labor unions in California and across the country.

Levi said these cuts aren't logical because America's infrastructure is falling apart and the politicians seem unwilling to invest.

"There's work that can be done. It just needs the funding and the politicians have to come together and fund it but there are definitely things that can be done,” he said.

In the face of a 20-billion-dollar budget deficit, California is expected to eliminate more jobs.

The spiking unemployment has cost California an estimated 40 billion dollars in lost wages.

Experts say more jobs will be lost before any sort of recovery begins.

"There's 40 percent unemployment in the building trades on the whole in southern California. We need to put people back to work. That's what is going to build the economy back up, when people go to work," said Ron Miller, a labor expert.

Miller said that California Governor Arnold Schwarzenegger has done nothing for workers during his two terms in office.

He said it appears that Governor Schwarzenegger is more worried about restarting his career in Hollywood than reviving California's economy.

“I think he's more interested in future endeavors then being governor. He needs to do his job and really it's a little bit too late for him to start doing his work,” Miller said.

US stocks fall on weakening recovery

The US Dow Jones closes lower for the third day


Source: Press TV
http://www.presstv.ir/detail.aspx?id=138494§ionid=3510213


Wall Street indexes continue to plunge as traders witness more signs that the global economy is slowing including a rise in the number of unemployment claims.

The blue chip index fell 58.88 points, or 0.57%, to 10319.95 on Thursday, adding to a 320-point drop over the prior two sessions as poor data on US weekly jobs and a fall in euro-zone industrial production added to investors' concerns about a possible double-dip recession, the New York Times reported.

New jobless claims announced on Thursday only added to the sour mood.

The US Labor Department said new unemployment claims hit a six-month high last week as 484,000 Americans signed up for jobless assistance.

These are the latest of several disappointing developments that included an acknowledgment by US Federal Reserve officials that the pace of recovery is likely to be more modest than anticipated.

Stock markets across the world sharply dropped on Thursday over growing fears about the slowing of global economic recovery and troubling financial news.

Europe's main stock markets tumbled as bourses in London, Frankfurt and Paris opened quite depressed.

The losses came after financial markets slumped in the US and Europe amid disturbing financial news.

On Thursday, shares in Tokyo dropped 2.02 percent and South Korean stocks plunged by 1.01 percent.

Stock markets in Sydney and Hong Kong also fell by 1.42 percent and 1.09 percent respectively in early Thursday trade.

US unemployment on the rise again

US economic recovery on a downturn as unemployment
claims rose in July



Source: Press TV
http://www.presstv.ir/detail.aspx?id=137631§ionid=3510203


The US Labor Department has reported another rise in new claims for unemployment for the preceding week, underlining a persistently weak labor market.

The new figures, released Thursday is reflective of a slow growth in the American labor market, posing a challenge to the fragile economic recovery from its greatest downturn since the Great Depression.

Initial demand for US unemployment benefits rose 19,000 to 479,000, compared to market speculation of a drop to 455,000.

”While these numbers are volatile, we haven't really made progress in the labor market and that's kind of troubling when you think about the broader economic recovery,” said Andrew Gledhill, an economist at Moody's Economy.com.

"For the recovery to turn into a self-sustaining expansion, we need people to have wage income coming in and until that happens, we are still in a tenuous position," Gledhill added, quoted by Reuters.

The US government's monthly employment report, due on Friday, is expected to show that nonfarm payrolls fell 65,000 in July after waning 125,000 in June.

Private-sector payrolls are expected to rise a mere 90,000 and the unemployment rate is anticipated to rise to 9.6 percent from last month's 9.5 percent.

This month's economic figures will likely spell trouble for President Barack Obama's Democratic Party allies who face mid-term elections in November and risk losing their majority and control in the US Congress.

Obama's popularity has suffered a great deal as a result of the slow economic recovery in the US as well as a number of other issues, such as his inadequate response to BP's oil spill disaster and the failure to deliver on his repeated pledges of 'change' that helped him win the presidential election in 2008

Former US Fed chief warns of recession

Alan Greenspan, former chairman of the US
Federal Reserve, warns that ‎the US economy
may be heading for a double-dip recession.



Source: Press TV
http://www.presstv.ir/detail.aspx?id=137238§ionid=3510213


Former chairman of the US Federal Reserve Alan Greenspan has added his weight to warnings about a pause in the economic recovery and a double-dip recession.

"We're in a pause in a recovery, a modest recovery but a pause in the modest recovery feels like a quasi-recession," he told NBC on Monday, amid worries about a slowdown in economic recovery.

When asked about the chances of another US economic recession, Greenspan said, "It is possible if home prices go down. Home prices as best we can judge have really flattened out in the last year."

He also predicted that unemployment will remain at its current high level of 9.5% for some time.

"The financial system is broke and I see we just stay where we are," he said. "There's nothing out there that I can see which will alter the level of unemployment."

Meanwhile, Greenspan's successor Ben Bernanke said America has a long way to go to achieve full economic recovery, warning that Americans may still face economic hardships in the coming months.

Figures released on Friday showed that US growth had slowed from an annual rate of 3.7 percent in the first quarter to 2.4 percent in the second.

Greenspan served as chief of the US Fed from 1987 until his retirement in 2006 when he was replaced by Ben Bernanke.

Greenspan also expressed concern about the limited impact of stimulus measures.

"Our problem is that we have a very distorted economy," he said. Recovery had been limited to "large banks, large businesses and high income individuals."

Dollar index hits 3-month low

Source: Press TV
http://www.presstv.ir/detail.aspx?id=137125§ionid=3510203


The value of the dollar has fallen to its lowest level against a basket of six major currencies since late April over concerns about sluggish recovery of the US economy.

The greenback's DXY index on Monday plunged as low as 81.433 to mark a three-month low against the currencies.

The falling came after the markets were worried by a series of US economic data that have not met expectations.

Market traders also predicted a further drop in the value of the American currency.

"For now, I think the overall trend of Dollar weakness still remains in place," a trader for a European bank told Reuters.

The US Commerce Department released data showing the growth of the world's biggest economy slowed between April and June.

The new figures found that the country's gross domestic product (GDP) grew by a disappointing 2.4 percent in the second quarter, compared with an annual rate of 3.7 percent in the previous three months.

The country's high unemployment rate of 9.5 percent also fueled concern about US economy's slowing recovery

US regulators shut 8 more banks

Source: Press TV
http://www.presstv.ir/detail.aspx?id=135115§ionid=3510203



The number of bank failures in the US continues to climb as regulators have shut down eight more banks in the states of Florida, South Carolina and Michigan.

The closed banks were holding $2 billion in combined assets. The latest closures bring the number of US bank closures so far this year to 96.

US regulators closed a total of 140 banks in 2009. Now, experts say that figure will be surpassed this year.

The Federal Deposit Insurance Corporation (FDIC) predicts that bank closures through 2014 will cost it 60 billion dollars.

FDIC Chairman Sheila Bair told Bloomberg in a recent interview that 2010 is going to be the peak year for bank failures in the US.

Georgia, Illinois and Florida are among the states hit hardest by the banking crisis.

Restoring US balance to be 'painful'

Erskine Bowles, the co-chairman of US administration's deficit commission

Source: Press TV
http://www.presstv.ir/detail.aspx?id=134888§ionid=3510203


Leaders of US administration's deficit commission say restoring US fiscal balance will be a painful process that requires not only spending cuts but also some tax increases.

Erskine Bowles and Alan Simpson said at a U.S. Chamber of Commerce event on Thursday that the bipartisan panel is eying tax breaks which include the deduction of popular mortgage interest and cutting government spending in its effort to recommend ways to cut the estimated $1.4 trillion federal deficit.

"It is all going to be very painful," Reuters quoted Bowles as saying.

He also made it clear that he believed about 75 percent of the deficit reduction effort should come from spending cuts and 25 percent from revenue increases.

"I just want to see the vast majority of it come out of spending," added Bowles.

He warned that the US federal debt would probably hit more than 14 trillion dollars in 2011.

Bowles earlier said the deficit was like a cancer that would destroy the country from within unless tough action was taken by Washington.

His comments come as the US Federal Reserve says US unemployment will reach 9.2 to 9.5 percent by the end of this year. It has also noted that the economic recovery continues but with a moderate pace.

US Federal Reserve released a report Wednesday that depicted a gloomier picture of US growth outlook than what was expected.

According to the report the retail numbers are lower, mortgage applications fell and the country is not growing as fast as expected.

US Fed sees more tough times ahead

Source: Press TV
http://www.presstv.ir/detail.aspx?id=134839§ionid=3510203


The US Federal Reserve says the American economy is facing an outlook worse than expected because of faltering growth and rising unemployment.

The US central bank has warned that growth will slow to 3.0 to 3.5 percent this year, down from the 3.2 to 3.7 predicted just months ago, AFP reported on Wednesday.

It has also noted that the economic recovery continues, but at a moderate pace.

Meanwhile, the forecast for unemployment at the end of this year is 9.2 to 9.5 percent, meaning that the troubled labor market will recover more slowly than expected.

The US jobless figure is not expected to go below seven percent before 2013, leaving millions of Americans out of work. The Fed might consider whether further policy stimulus is necessary as it gauges growth.

But with interest rates at all-time lows, analysts say the central bank has few tools to help fix the US economy.

In US, four more banks collapse

Source: Press TV
http://www.presstv.ir/detail.aspx?id=134176§ionid=3510203


Four more banks in the United States have been shut down, bringing the number of banks fallen prey to an economic downturn to 90 so far this year.

The Federal Deposit Insurance Corporation (FDIC) on Friday seized Bay National Bank and Ideal Federal Savings Bank, both based in Baltimore, Maryland.

The FDIC regulators also closed USA Bank in Port Chester, New York and Home National Bank in Blackwell, Oklahoma.

The closed banks were holding USD 1.13 billion in combined assets. The closures cost the FDIC deposit-insurance fund USD 159.9 million.

FDIC Chairman Sheila Bair told Bloomberg in an interview that 2010 is going to be the peak year for bank failures in the US.

Since 2009, the US has seen the fall of 230 banks.

“The remaining shakeout will be geographically concentrated and much more restricted to smaller institutions,” said Steve Reider, president of Bancography, a consulting firm based in Birmingham, Alabama, according to Bloomberg.

“I continue to think that geography is destiny.”

Georgia, Illinois and Florida are among the states hit hardest by the banking crisis