G.O.O.D

Source: Reuters

Sweden cut interest rates by a record 175 basis points on Thursday, prompting speculation of dramatic cuts elsewhere in Europe to try to stop a global slump spreading faster than policymakers had anticipated.

Japanese companies slashed spending, showing the economy was in a deeper recession than the government estimated, after U.S. data showed private sector employers axed jobs at the fastest pace in seven years.

“With indicators pointing to an intensifying global adjustment in employment and business spending, our forecast of the deepest four-quarter GDP slide in the developed world since World War Two appears to be on track,” JPMorgan economists said.

In a deeper than expected cut, Sweden’s central bank chopped its key interest rate by a record 175 basis points to 2.0 percent to prevent the economy sliding further into recession.

The Riksbank said it expected rates to remain at that level over the coming year. There was an “unexpectedly rapid and clear deterioration in economic activity since October,” it said.

The Reserve Bank of New Zealand sliced interest rates by a record 150 basis points to a five-year low of 5.0 percent and said it would probably have to cut rates again.

Indonesia also made a surprise cut in its key interest rate, by 25 basis points to 9.25 percent, the first since December 2007 as the government sought to protect the economy.

Britain and the European Central Bank were due to announce rate cuts later on Thursday and with Britain heading into recession, the Bank of England could slash rates to their lowest in more than half a century.

A rapid deterioration in business conditions has raised fears Britain could be heading for a much deeper downturn than anybody expected.

“They need to do something aggressive again,” said George Buckley, chief UK economist at Deutsche Bank,.

Analysts expect a 50 basis point reduction from the European Central Bank and twice as much from the Bank of England.

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Source: Reuters

The U.S. economy slipped into recession in December 2007, the nation’s business cycle arbiter declared on Monday, and the downturn could be the worst since World War Two.

The National Bureau of Economic Research said its business cycle dating committee members met by conference call on Friday and concluded that the economic expansion that started in November 2001 had ended. The previous period of economic expansion, which ended in 2001, lasted 10 years.

The current recession, which many economists expect to persist through the middle of next year, is already the third-longest since the Great Depression, behind only the 16-month slumps of the mid-1970s and early 1980s.

“I think that we’ve got a ways to go, that this is going to be probably a deep and long recession,” Jeffrey Frankel, a Harvard University economist who sits on the NBER’s committee, told CNBC television. “It could be the worst post-War recession. We don’t know yet.”

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