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Recession May Be Lifting, But Slowly

[May 21, 2008.]

 

The U.S. Commerce department announced some dour but unsurprising findings earlier today. Retail prices for the month of April decrease by 0.2%, said the Commerce Department. During the month of March, retail sales had gone up by 0.2%, so since the beginning of March retail sales have grown by a net amount of 0%.

The good news is that, while these findings are disappointing, they are  not as disappointing as many analysts have predicted. The economic recession that hit the U.S. so hard this year has prompted the Federal Reserve Board to lower interest rates; moreover, many American consumers have received substantial rebates on their income taxes, which mostly arrived in their bank accounts during the beginning of May. As a consequence, Americans' expenditures have increased, boosting the economy. Despite the slight decrease in U.S. retail sales, perhaps America is getting ready to pull out of the recession.

Meanwhile, Ben Bernanke of the Federal Reserve Board states that the financial situation, especially the global financial situation, has improved slightly but remains “far from normal.” Financial experts say that, now that the economy is slowly starting to go back up, the Federal Reserve has to be just as cautious as ever, if not more so. The Fed cannot lower interest rates any more than it already has, say financial experts, or else there will be a problematic rate of inflation.

Merchants have added to their inventories of goods by 0.1% in March; however, this is a less substantial increase than the merchants had predicted. They had prepared for a decrease in consumer activity. Nonetheless, financial experts maintain that our economy has started to show signs of growth.

Michelle Meyer, of the New York firm Lehman Brothers, says that the Fed's actions “suggest growth will be a little stronger in the first and second quarters [of 2008].

 

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