Economic news continues to paint a gloomy picture

27th August 2010

The growing prospect of a double dip has undermined the world's stock markets and left the FTSE and the Dow at their lowest level for seven weeks.

FT Alphaville picked up on the terrible news that US existing home sales were 12% lower in July than in June. The annual rate of 276,000 units is the lowest since records began in 1963. 

Gartmore fund manager John Bennett believes that a clear slowdown in US GDP and a double dip in US housing may prompt the Fed to embark on more Quantitative Easing. Citywire report him as saying that but for this he would be even more underweight in European Financials than he already is.

There was more doom and gloom from the latest US durable goods orders. This provides a measure of the level of production, with the July increase of 0.3% falling well below the 1.6% estimate. 

The Guardian has canvassed the reaction of various influential economists. 

The award for the most extreme view goes to Andrew Lilico, chief economist at the Policy Exchange. He thinks the UK is likely to suffer from a double dip recession, followed by a boom, driven by huge monetary growth.

According to Money Saving Expert this has led him to forecast that UK interest rates could rise to 8% by 2012. 

As if that wasn't enough, The Express has weighed in with the downgrading of Ireland's credit rating. 

They report Charles Stanley analyst Jeremy Batstone-Carr as saying that the growing tide of bad news from the US means a double-dip recession is now a probability rather than a possibility. He finishes off by warning that the "real horror story" is likely to emerge in late October when the markets will get a first look at how well the American economy had performed during the third quarter.

That should be just in time for Halloween then. Trick or treat anyone? 

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