A recession in the U.S. is "unlikely" as companies post higher profits and consumers continue to buy goods, says The Conference Board in a report Wednesday.
"While the correction in the financial sector is just beginning, the correction in the housing sector is nearly over," said Gail D. Fosler, The Conference Board's president and chief economist. She said the economic shocks from the contracting financial sector are not enough to tip the U.S. into a recession.
Fosler said that, while there are similarities between the current environment and the period leading up to the 1990 recession, there are sufficient differences, too. "The business sector today is fundamentally stronger than at any time since the Sixties, and the booming exports are helping support solid and continued structural productivity gains. Also, the policy sector is moving to establish a solid floor of tax and interest rate cuts to support the economy," she explained.
In addition, she attributed the sluggishness of consumer spending to the rise in gas prices. However, she pointed out that total wage and salary growth is about 5 percent on an annualized basis.
Her conclusion was that "income gains" continue to be reasonably strong.
On Wall Street, investors took solace that the Federal Reserve was not concerned with inflationary pressures. As a result, the S&P 500 gained 0.8 percent to 1,360.03. The S&P Retail Index leapt 2.1 percent to 397.18.
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