Tax rebate won't stem U.S recession: Merrill ???
Wed May 14, 2008 12:52am EDT
(Reuters) - The U.S. economy is in a recession and stimulus from a
government tax rebate later this quarter will only tem****arily stem a
fall in consumer spending, a Merrill Lynch economist said on
Wednesday.
U.S. households will get tax rebates next month as part of a $152
billion stimulus package passed earlier this year, aimed at propping
up an economy hit by the subprime mortgage crisis, losses at top banks
and a credit crunch.
"I still maintain the business cycle is bigger than the government,"
Merrill's North American economist David Rosenberg said at a client
conference in Singa****e.
He said the world's largest economy was already in recession as
consumer spending and confidence had fallen and jobs losses were
rising, with the number of hours worked having fallen sharply.
Describing housing as "the quintessential leading indicator",
Rosenberg, a long-time bear on the U.S. economy, said he expected home
prices to fall another 15-20 percent before stabilizing.
He also predicted inflation in the United States would slow as
consumer spending weakens, and that the Federal Reserve would be
forced to cut rates further to deal with the recession.
"No asset class security is priced today for a recession scenario,"
Rosenberg said, which is why he was bullish on U.S. Treasuries but
bearish on stocks.
|
