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Dr. Stephen Leeb
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Dr. Stephen Leeb is a recognized authority on the stock market, macroeconomic trends and commodities, especially oil and precious metals. Dr. Leeb is founder of the Leeb Group, which publishes a line of financial newsletters including The Complete Investor, Leeb's Income Performance Letter,... More
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Game Over: How You Can Prosper in a Shattered Economy
  • Stunted "Green Shoots" 0 comments
    May 21, 2009 5:18 PM

    In the wake of efforts to find "green shoots" of growth in the economy, it now appears that they will require more time to sprout in significant numbers.
    This week, for example, brought the release of the minutes from the last meeting of the Federal Reserve's Open Market Committee in late April. It turns out that the Fed lowered its outlook on the economy for both 2009 and 2010, saying that it will contract more sharply, with unemployment rising higher, than previously expected.
    The Fed currently projects that the U.S. economy will decline 1.3-2 percent in 2009, vs. its previous forecast in January of only a 0.5-1.3 percent drop.
    The Fed's weak outlook is backed by what we called the new economic consensus in our weekly update two weeks ago. This is that the economy likely is now declining less than before, and that actual growth will begin later this year. But the recovery will be long and slow, weighed down by continued high unemployment and lackluster consumer spending.
    If there's any good news here, it's that the massive fiscal and monetary stimulus has prevented a much worse scenario. On that score, the Fed considered during last month's meeting whether to raise the amount of Treasury and mortgage-related securities it will buy beyond the $1.75 trillion already committed. Presumably, that will occur if the economic situation deteriorates further.
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