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The U.S. service economy expanded at a slower pace in September than in August, a trade group said Wednesday.
The Institute for Supply Management's index gauging the health of non-manufacturing industries registered at 54.8 in September, down from 55.8 in August and below the 12-month high of 60.7 reached in June.
The index was close to the reading of 54.5 that economists surveyed by Thomson Financial anticipated.
A reading above 50 indicates economic expansion in the service sector, while one below 50 indicates contraction.
The service sector makes up 80 percent of U.S. economic activity and spans industries such as banking, retail, travel, construction, mining and farming.
Published by Madlen Read, AP Business Writer

Labels: Economy, Farming, Supply Management, Thomson Financial

Alan Greenspan said the odds of a recession have grown since earlier this year, even though "the economy is not doing badly at this stage."
In an interview with The Associated Press on Monday, the former Federal Reserve chairman put the odds of a recession at greater than one in three. "But best I can judge, it is less than 50 percent," he said.
Greenspan's one-in-three prediction earlier this year rocked Wall Street, which has been suffering through a period of turbulence. A deepening housing slump and a spreading credit crunch have raised fears on Wall Street, on Capitol Hill and on Main Street about the country's economic health.
Many analysts are counting on the Federal Reserve to lower interest rates on Tuesday to provide some relief.
On other issues, Greenspan said the United States must look at ways to reduce gasoline use both as a matter of national security and to protect the environment.
Greenspan said he favors a tax on gasoline to help curb demand. But recognizing that this could be an "undue burden" on poor people, he suggested a rebate of some sort. There is a national gas tax of 18.4 cents a gallon.
Source: AP

Labels: Alan Greenspan, Economy, Federal Reserve, Gasoline, Oil, Recession, Wall Street

Strained by an ailing housing market and credit woes, the economy in 2007 is expected to log its worst growth in five years and should be somewhat sluggish next year.
The No. 1 risk, though, is that the economy will lose its footing altogether and fall into a recession, forecasters say.
A forecast released Monday by the National Association for Business Economics puts the growth of gross domestic product at 2 percent for this year. The pace was 2.2 percent in the group's previous survey, in May.
If the latest prediction proves correct, growth would be the weakest since 2002. Back then the fragile economy was emerging from a recession and grew by just 1.6 percent.
Economic growth for next year also was downgraded slightly. The economy is now projected to grow by 2.8 percent in 2008, versus 2.9 percent in the previous survey. Those most concerned about the threat of recession tended to cite problems in the higher-risk "subprime" mortgage market and potential declines in home values as the most likely forces that could short-circuit the 6-year-old economic expansion, the group said.
Source: Jeannine Aversa, AP Economics Writer

Labels: Economy, Housing, Recession, Subprime Mortgages

Federal Reserve Chairman Ben Bernanke predicted Tuesday the economy will rebound from an anemic performance at the start of the year even if the housing slump continues.
Economic growth in the first three months of this year nearly stalled, logging just a 0.6 percent pace. It was the worst quarterly showing in more than four years.
However, Bernanke said he believes some of the forces that figured prominently in that poor performance -- including a bloated trade deficit, cutbacks by businesses in inventory investment and weak federal defense spending -- "seem likely to be at least partially reversed in the near term." Even with Bernanke's hopeful outlook, the Fed chief did make clear once again that the painful residential real-estate bust, which started last year, "appears likely to remain a drag on economic growth for somewhat longer than previously expected," he said. But, thus far, the problems in the housing market haven't spread through the broader economy in a significant way, Bernanke said. "We have not seen major spillovers from housing onto other sectors of the economy," he observed.
On the inflation front, Bernanke said that underlying inflation, which excludes food and energy prices, still remains "somewhat elevated" despite some improvements. Bernanke again clung to the Fed's forecast that underlying inflation seems likely to moderate gradually over time. Still, he said, there is a big risk to the economy is if this forecast doesn't materialize.
Source: AP

Labels: Ben Bernanke, Economy, Energy Prices, Inflation, Real Estate

Stocks pointed toward a lower opening Tuesday as Wall Street cautiously awaited data on the nation's service sector.
Investors will be examining the Institute for Supply Management's May index on non-manufacturing industries, scheduled to be released at 10 a.m. EDT. According to the median estimate of economists surveyed by Thomson Financial, the market expects the index to hold steady at 56.0, the same reading as in April.
A reading above 50 indicates expansion in the service sector, a diverse group of industries that represents about 80 percent of U.S. economic activity and includes retailing, banking, construction and agriculture. Investors are hoping the report will indicate that the service sector is still expanding. Growth that is too robust could stoke worries about the Federal Reserve raising interest rates later in the year, however. On Friday, the ISM's manufacturing index came in above expectations.
Meanwhile, Fed Chairman Ben Bernanke's speech by satellite to the International Monetary Fund in South Africa Tuesday gave investors little incentive to buy. He said in prepared comments that the economy will recover from its recent feeble performance, despite a housing slump that "appears likely to remain a drag on economic growth for somewhat longer than previously expected."
Bernanke's forecast of rebounding growth, as well as a reiteration that inflation remains "somewhat elevated," made it appear unlikely the Fed will lower rates anytime soon.
Source: AP

Labels: Ben Bernanke, Economy, Stocks, Wall Street

The economy nearly stalled in the first quarter with growth slowing to a pace of just 0.6 percent. That was the worst three-month showing in over four years.
The new reading on the gross domestic product, released by the Commerce Department Thursday, showed that economic growth in the January-through-March quarter was much weaker. Government statisticians slashed by more than half their first estimate of a 1.3 percent growth rate for the quarter.
The main culprits for the downgrade: the bloated trade deficit and businesses cutting investment in supplies of the goods they hold in inventories. For nearly a year, the economy has been enduring a stretch of subpar economic growth due mostly to a sharp housing slump. That in turn has made some businesses act more cautiously in their spending and investing.
The economy's 0.6 percent growth rate in the opening quarter of this year marked a big loss of momentum from the 2.5 percent pace logged in the final quarter of last year.
Federal Reserve Chairman Ben Bernanke doesn't believe the economy will slide into recession this year, nor do Bush administration officials. But ex Fed chief Alan Greenspan has put the odds at one in three.

Labels: Alan Greenspan, Ben Bernanke, Economy, Fed