Moodys lowers US economic outlook through 2012

[OhioChick]

Source: AP

Associated Press, 08.15.11, 05:30 PM EDT

NEW YORK -- Moody's Analytics on Monday lowered its outlook for growth in the U.S. economy this year and next, saying it sees "significantly weaker" prospects for the economy than just a month ago as the country struggles to avoid another recession.

The report issued by the sibling company of credit rating agency Moody's ( MCO - news - people ) Investors Service cites the recent political wrangling over the U.S. debt ceiling and the revived debt crisis in Europe as leading factors in the bleaker economic picture.

"The odds of a renewed recession over the next 12 months, already one in three, will increase if stock prices continue to fall," Mark Zandi, chief economist for Moody's Analytics, says in the report. He said the economy must grow 2.5 percent to 3 percent a year to add jobs fast enough to keep the unemployment rate stable - something that won't happen soon.

Moody's now expects real gross domestic product to grow at an annualized rate near 2 percent in the second half of this year, and a little more than 3 percent next year. That compares with its earlier projection of 3.5 percent in the second half of 2011 through 2012.

Read more: http://www.forbes.com/feeds/ap/2011/08/15/business-financials-us-moodys-us-economy-outlook_8624648.html

[BeyondGeography]

1. Three percent growth next year?

And?

They wanted to make a post-S&P headline I guess.

[bhikkhu]

4. That would be quite good.

I really don't get how they can forecast a healthy growth rate and still make it sound gloomy.

[TrollBuster9090]

5. Leave it to Forbes. nt

[OHdem10]

7. Since everything is political, I find it puzzling that our growth

rate had been predicted by Bernanke testifying
before Congress would be good if we can get to
1and1/2 One and one-half percent. Based on Blue-Chip
Companies Economists reports.

[Igel]

8. Because "healthy" depends on the patient's condition.

A friend was depressed and was losing weight. At 80 lbs her weight stabilized.

I was depressed and hit 205. My weight stabilized.

Now, for me having my weight stabilize at 205 wasn't all that bad. Should have been 30 lbs lower, but 205 is survivable. For my friend, having her weight stabilize at 80 wasn't healthy. She was suffering organ damage.

3% is stable. If the economy is healthy, 3% is good. If there's 9.2% unemployment, 3% keeps unemployment at around 9.2%. If you think the current economy is "healthy," well, sorry--I don't agree. After a financial crisis or recession you want a high enough growth rate to get you healthy. We groused at a 4.8% unemployment rate and 2.5-3% growth. Now some people seem ecstatic at a 9.2% unemployment rate and 2.5-3% growth.

My friend's weight eventually got back to 110 and stabilized. *That* stabilization was healthy.

[bhikkhu]

9. Of course, and 8 years of net zero jobs growth under bush really shows

...ordinarily, a healthy economy is hard pressed to create the 150k jobs per month that we need to keep up with population growth. Personally, I think that resource constraints are currently making that nearly impossible, and it will remain so for the foreseeable future - but that's another problem as well.

If it was expected that Obama would create an economy that kept up with population growth, and that also created enough jobs that 8 years of repug mismanagement were accommodated as well, then we would have to have 300k jobs created per month, every month, for eight years.

If it was expected that Obama would solve the whole 8 years of mess in one term (as it seems people are demanding) then we would have to have 4 years of uninterrupted job creation at a rate of 450k new jobs per month...which has never happened in history, of course, but that's what seems to be demanded of this president anyway.

Positive economic growth is good, and should be good in anyone's book; we've seen the alternative, and its just a short trip from here. 3% economic growth is also healthy. Arguably, given the current fundamentals of energy and resource constraints, anything more than that is just blowing fragile bubbles and creating more instability.

[Mr Deltoid]

2. I suspect we wont see much growth until the GOP stops intentionally wrecking the economy

That and the Bush tax cuts expiring.

[TrollBuster9090]

6. I predict you've seen the high water mark for the Tea Party, and these downgrades/fcasts are why.

The Chamber of Commerce and the fortune 500 companies were more than happy to bankroll Dick Armey's tea party astroturfing machine as long as all they were doing was defending tax cuts for plutocrats. But as soon as they started holding the debt ceiling hostage, causing a downgrade in bond ratings and a mini-crash in the stock market, that's a different story entirely. Also, the fact that the tea party freshmen didn't obey their corporate masters when the CEOs of 500 large companies sent a letter to Boehner to deliver to the GOP freshmen telling them to stop screwing around and just raise the debt ceiling is an area of concern.

So, just sit back and watch the astroturfing money for the Tea Party dry up. Those corporations are going to start bankrolling moderate Republicans that will protect their tax cuts, but not in a way that threatens the value of their existing assets.

The take home message for Democrats is: don't rely TOO heavily on winning the 2012 elections by painting the GOP as the party of scary extremists, because there won't BE as many extremists in 2012.

[cstanleytech]

10. You might even see them start bankrolling more liberal democrats to.

Not that they would bankroll any that they consider *to* liberal of course but ones thats most liberals would vote for that wont raise the corporations much higher than say 30% otherwise if we worse case scenario then they might end up seeing what they would consider extreme FDR type liberals who would want 60 - 90% taxes getting elected.

[Kolesar]

12. The banks are going to fund President Obama

They did in 2008.

[onehandle]

3. It's a miracle that the GOP lineup is so horrible.

Romney is the only one who has even a chance to beat the President.

[harvey007]

11. Zero growth is more likely

Hang on to your hats. It's going to get rough.