Last week, some grim statistics came out of the United States. I've been bearish about the world's largest economy for some time. This column first warned that America faced recession back in January 2007!
But even I was spooked by the minutes of the Federal Reserve's most recent policy meeting, held last month. For the US central bank not only cut this year's growth forecast but, at the same time, raised its estimates for 2008 inflation.
Fed policy-makers predict the US will grow only 1.5 per cent this year - down from the 2.2 per cent forecast they made back in October. That's certainly not consistent with "recession" - defined as at least two successive quarters of negative growth - for two reasons.
Firstly, the economy could contract for six months, then expand during the second half of the year, while still registering a 1.5 per cent annual growth rate. These forecasts could also spell recession as it's impossible, at a time like this, for the Fed to be anything other than as optimistic as it can possibly be.
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