Sep 2, 2010

Potential for a double-dip recession may rise in USA, says a survey

The economic outlook for nine U.S. Midwest and South-Central states slumped for a third consecutive month in August, pointing to slower growth as the potential for a double-dip recession rises, according to a survey of supply managers released on Wednesday.
 
Creighton University's Business Conditions Index fell to 55.8 in August from 60.8 in July. A reading of 50 is considered growth neutral, while readings above that signal expansion over the next three to six months.
 
Just over a third of the survey's respondents said it was likely or very likely the U.S. economy will slip back into a recession in 2011, while 44 percent said there was a 50 percent chance of that happening.

Still, the Mid-America region looks stronger than the national economy, said Creighton University Economics Professor Ernie Goss.

"Over the past several months, for example, the region has been adding jobs at a very healthy pace while U.S. job growth has been nil," he said in a statement.

"With a weak dollar supporting agriculture and energy commodity prices, I expect this gap between the regional and national economies to remain and potentially widen," Goss added.

The survey's employment index dipped to 55.2 in August from 58.8 in July.

The prices-paid index, which tracks the cost of raw materials and supplies, rose to 64.6 from 64.1 in July, marking the 15th consecutive month the inflation gauge has risen above growth neutral.

Supply managers were surveyed in Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

The Omaha, Nebraska-based Creighton Economic Forecasting Group has conducted the monthly survey since 1994, using the same methodology as the national Institute for Supply Management.

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