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Last updated at: (Beijing Time) Thursday, November 15, 2001

Econometrician Predicts Deeper, Longer US Recession: Roundup

Real U.S. GDP will decline at an annual rate of about 2 percent in each of the next three quarters, indicating a deeper and longer recession than most predict, a new report said Wednesday.


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Real U.S. GDP will decline at an annual rate of about 2 percent in each of the next three quarters, indicating a deeper and longer recession than most predict, a new report said Wednesday.

It will rise at an annual rate of 2 percent to 2.5 percent in the second half of next year, followed by a gain of 3.5 percent in 2003, Michael K. Evans, chief economist at the consulting firm American Economics Group.

The renowned econometrician also said that when the U.S. economy does begin to recover, it will probably be perceived as a "jobless recovery," as he expects the unemployment rate to increase to 7 percent by the end of next year, declining only slightly to 6.5 percent during 2003.

In the report Evans outlined the reasons the U.S. federal government fiscal stimulus package will have little impact on boosting economic growth.

"By now we all know there is no free lunch," he said. " Economies cannot return to perfect health simply by ordering the central bank to print more money, or deciding to have the government spend more or tax less."

Evans said that the federal government's fiscal stimulus program will be offset by tax increases and cutbacks at the state and local level. Further counteracting the effects of increased federal spending, a perceived return to "deficits are forever" could worsen business confidence and lead to a decline in the stock market that would retard the recovery in capital spending necessary for self-sustaining growth, he said.




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