Fed's Moskow says U.S. is not in recession
CHICAGO (AFX) - Michael Moskow, the president of the Chicago Federal Reserve Bank, said he does not believe the U.S. economy is in recession.
"I don't believe we are in a recession if you use the classic definition of a recession" of two consecutive quarters of negative GDP growth, Moskow told reporters following a speech to the Prarie State Foundation.
In his speech, Moskow said the"situation looks good for continued growth".
Moskow, a voting member of the Federal Open Market Committee this year, noted that consumer spending is holding up despite the recent decline in confidence.
"If you look at consumer confidence indications, it is a decline. But if you look at what consumers are doing, they are spending at moderately higher rates," Moskow said.
He said he expects a"strong second half" after two quarters of sluggish growth this year as business and consumer spending rebound.
"We believe that both consumer spending and business investment should pick up again in the second half," Moskow said.
Energy prices should"retreat," giving consumers more discretionary income to spend on other goods and services. Another factor supporting growth are low interest rates will also fuel mortgage refinancing.
Moskow said the speed of the expected rebound may be enhanced by new information technology that will enable businesses to know when inventories have come down to more desirable levels so production can increase.
The Chicago Fed bank president said he expects inflation to remain subdued this year. He said the CPI should be lower than last year's 3.5 pct rate and the core rate should be roughly unchanged from last year's 2.5 pct level.
He also said there is a risk that the recent drop in consumer confidence"will linger and reduce spending." He added that there is a danger that businesses might become more pessimistic about the economic outlook, making them less likely to continue capital spending.
gar/lj

<center>

<HR>

</center>