Transcripts

More Signs The Economy Is Slowing

SUSIE GHARIB: Evidence continues to mount that the U.S. economy is slowing dramatically, as Americans hold back on making big purchases. New government data today on housing and durable goods both showed sharp declines. Sales of new homes fell 4.3 percent last month to a seasonally adjusted rate of just over a million units. Inventories of unsold homes hit a record high, as the median price for a new home fell to $230,000, down $4,000 from June. Meanwhile, orders for long lasting, big ticket items dropped more than expected, nearly 2.5 percent in July, led by softening demand for automobiles and aircraft. But despite the gloomy data, most economists are not expecting the U.S. economy to fall into recession.

CARL RICCADONNA, ECONOMIST, DEUTSCHE BANK: Well, it looks like we`re not necessarily heading towards a recession, but we are looking towards a growth recession. And what this means when economists talk about a growth recession is not necessarily that growth is going to turn down, but we will be looking at very anemic growth figures going forward, probably on the order of about 1.5 to 2 percent GDP growth, which is certainly lower than what we`ve seen in the past couple of years.

GHARIB: Riccadonna believes the Federal Reserve will not need to raise interest rates again this year. But economists are split on whether the Fed will cut rates next year.