Coming Week: Double-Dip Days
05/24/08 - 09:55 AM EDT
Joanna Ossinger
Watch out for the "W" economy.
No, it's not about President Bush -- it's the idea that the U.S. will have two economic dips, with stagnation or even recession each time. Some people say we're only in the first of those dips now. The Federal Reserve meeting minutes from last week showed that policy makers are concerned about inflation. With oil prices breaking $135, and other commodities, such as food and metals, also at highs, it doesn't look as though consumers are going to get much relief anytime soon. "I think the fact that the last rate-cut vote was that close surprised people," says Vinny Catalano, chief investment strategist at Blue Marble Research. "The tone of the minutes" was more hawkish than might have been expected, and "the concern is there regarding inflation -- which we know was on their minds, but it's a little more so than we thought." "I don't think the Fed has to do anything to lower inflation," says Ethan Harris, chief U.S. economist at Lehman Brothers. "They just have to wait for the weak economy to do the job... inflation usually peaks in the middle of a recession." The first-quarter preliminary gross domestic product figure will be released on Thursday in the holiday-shortened week ahead. The advance figure was 0.6%, creating a positive surprise for markets that had guessed the U.S. economy would be entering a recession already. Many observers expect that number to be revised upward again; market-analysis group Briefing.com is looking for 1%.
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