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Obama Warns Recession Is Far From Over

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http://www.telegraph.co.uk/finance/finance...-from-over.html

President Barack Obama has given warning that the US economy will not recover for "many more months" and said the recession was worse than anyone had thought.

The President was responding to Friday's report on gross domestic product which showed that the US economy shrank by 1pc annual rate in the second quarter. The gloomy outlook comes just days after President Obama said the US "may be seeing the beginning of the end of the recession".

Warning the US recession was "even deeper than anyone thought", he said: "Important steps that we have taken over the last six months have helped put the brakes on this recession.

"But history shows that you need to have economic growth before you have job growth."

However the 1pc fall in US GDP was better than many economists had been predicting and was a distinct improvement on the first quarter when the US economy shrank by 6.4pc. The combined falls make the slump the worst recession since the Great Depression in the 1930s.

In the UK, the Monetary Policy Committee (MPC) is expected to leave Bank of England interest rates at 0.5pc when it meets this week. News that UK GDP fell by 0.8pc in the second quarter against the same period last year has also dampened expectations of a fast recovery in the UK. Many economists now believe that interest rates are likely to remain at their present levels until well into next year.

The more testing decision for the MPC will be whether to extend the programme of quantitative easing (QE). The Bank is in the process of spending £125bn on commercial bonds and gilts, with authorisation to spend another £25bn. A decision on whether or not to go ahead with the spending could be made on Thursday.

Howard Archer, chief economist for IHS Global Insight said: "It is very possible that divisions could emerge within the committee on whether or not to extend QE, and to what extent.

"Given the surprisingly deep GDP contraction in the second quarter and still major uncertainties about the outlook for the economy and bank lending, we suspect that the MPC will come to the conclusion at its August meeting that there is a strong enough case to use the final £25bn of the £150bn that it is currently permitted to spend on QE by the Treasury."

It's over but it's going to get worse.

Covering all bases then?

I wonder if someone has had a quite word with Obama that ramping could politically be very dangerous.

I wonder what Q3 will look like for the US, clearly they'll want a figure around 0% to claim the situation has stabilised, can they really engineer that in the figures or will reality come home to roost?

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yeah but the amazing bounce back is all down to him.

the reason its bad now is because of what happened before.

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yeah but the amazing bounce back is all down to him.

the reason its bad now is because of what happened before.

Can we do it? Yes we can.

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Guest theboltonfury
yeah but the amazing bounce back is all down to him.

the reason its bad now is because of what happened before.

The severity can't seriously be a shock to anyone. Bush and Blair have a lot to answer for.

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