DEBT FINANCING. U.S. recession fears grow

New data on the U.S. economy released Thursday added to fears Canada’s biggest export market may be headed into recession.
The number of Americans making claims for first-time jobless benefits climbed to the highest level in three months last week, the Labor Department reported Thursday.
Filings rose 11,000 to 428,000. The four-week average, a less volatile measure, rose for the fourth straight week to 419,500, the highest level in eight weeks.
Applications need to fall below 375,000 to show that hiring is increasing enough to lower the unemployment rate. They haven't been below that level since February.
Separately, the department reported that U.S. consumers paid more for a range of goods and services last month with the Consumer Price Index rising 0.4 per cent following a 0.5 per cent increase in July.
Excluding volatile food and energy costs, core prices increased 0.2 per cent. Prices for food, energy apartment rents, and clothing all increased.
A third report from the Federal Reserve said manufacturing was mostly weak outside of strong auto production. Factory output rose 0.5 per cent in August, after increasing 0.6 per cent in July.
“U.S. economic growth has come to a virtual standstill,” according to Mark Zandi, a chief economist with Moody’s Analytics. Zandi said in a news release that he gives 40 per cent odds of a U.S. recession in the next six to 12 months.
“Real GDP during the first half of the year increased at a nearly one per cent annualized rate and job growth decelerated from close to 200,000 per month at the start of the year to barely positive this summer,” Zandi said.
“This is not sustainable. Unless spirits improve soon, businesses will ramp up layoffs, consumers will pull back and the economy will fall into another recession,” he added.
Zandi cited a rising number of corporate layoff announcements and a flattening in retail sales.
“That big decline in confidence over the summer is showing up in the 'real' economic data, which is worrying,” BMO Capital Markets senior economist Jennifer Lee said in a commentary.
With files from The Associated Press Accessibility Links

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