Credit crises, weak employment, flat consumer spending and exports slump may result in a slowdown of the US economy and has triggered speculations on a looming recession in the world's biggest economy, analysts said Thursday.
Economic lifeline threatened
With a worsening situation in the credit market, the lifeline to economy, the US Federal Reserve has put in place a series of measures, including aggressive interest rate cuts, as part of a broad effort to stave off a full-blown recession.
The Fed, together with major western central banks, has decided to inject liquidity again into the financial system in a bid to ease the credit crunch.
However, David Rosenberg, chief US economist at Merrill Lynch, believed "as with all the Fed's steps to date, this move injects a bit more liquidity into the system, but does not cure the overall credit crunch or credit problems."
To some analysts, the moves are still not enough to root out the specter of a credit crisis. "We still believe today's action is not nearly a large enough step to make a big difference," as Rosenberg has said.
Weak employment erodes investor confidence
The US non-farm payrolls shrank in January and February of 2008, the first continued decline in the past five years, marking the unemployment market, which remained steady even after the housing market cooled and the credit crisis broke out, has entered a recession.
The decline reading in this category has eroded much of investors' confidence, dragging down all major US stocks. The Dow Jones industrial average plunged below 12,000 on the day when official figures were released.
Analysts said even a slight growth in job market may do good to spending and the economy as a whole, but the Fed projected the unemployment rate would climb up to 5.3 percent this year, much higher than last year's 4.6 percent.