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Economists Predict No US 'Double Dip' Recession - 2002-08-12

The National Association of Business Economics (NABE) Monday released an economic forecast which asserts without reservation that the still struggling U.S. economy will not slip back into recession.

The NABE survey says there will be no double dip recession despite a string of weak economic data, a depressed stock market, and ongoing corporate scandals.

The report surveyed 193 economists earlier this month. A clear majority, 69 percent, said there was little chance of another recession this year. An overwhelming majority, 77 percent, said the low interest rate and current U.S. monetary policy is appropriate.

Most said there is probably no need for the Federal Reserve to further reduce interest rates to stimulate the economy.

Tim O'Neill, chief economist at the Bank of Montreal and Vice President of NABE, says the bankruptcy Sunday of US Airways is likely to have little overall impact on the economy.

"Generally speaking, bankruptcies don't have much impact on the overall economy. In large measure because what you're talking about is the failure of a company with respect to the market they're trying to serve," he said. "If they are not adequately structured to serve the market, there may be competitors who are."

Mr. O'Neill does expect the U.S. economy to grow at a somewhat reduced rate over the final five months of the year.

The Bush administration has been predicting economic growth at a three percent rate by the end of the year. Most private sector economists believe that is overly optimistic.

The U.S. economy registered outright declines in three of the four quarters of 2001 and growth has recently been slowing from the rapid pace registered in the first three months of this year.