US sees widespread signs of economic slowdown: Fed

The US Federal Reserve has said that American economic activities saw "widespread signs" of slowdown in recent months, in yet another indication that recovery in the world's largest economy is losing steam.

The dour statement from the apex bank comes at a time when the US is grappling with high unemployment levels and high public debt.

"(There has been) continued growth in national economic activity during the reporting period of mid-July through the end of August, but with widespread signs of a deceleration compared with preceding periods," according to the Beige Book released on Wednesday.

The book provides a snapshot of economic activities in the 12 districts in the US.

As many as seven districts including Minneapolis, San Francisco and Dallas witnessed modest pace of economic growth while economic activities were on decline in remaining areas.

"Reports on manufacturing activity pointed to further expansion, although pace of growth eased ... Home sales slowed further following an initial drop after the expiration of the home buyer tax credit at the end of June, prompting a slowdown in construction activity as well," Beige Book said.

After expanding at a healthy pace, the US economic growth turned sluggish to 1.6 percent in the 2010 second quarter. The economy is slowing down despite massive stimulus measures and the Federal Reserve maintaining key interest rates at near-zero levels.

Meanwhile, the unemployment rate in August rose to 9.6 percent and a staggering 54,000 jobs vanished during the same period.

Chances of double dip recession in US raised: Roubini

Economist Nouriel Roubini has come out with yet another chilling prediction. Roubini warns that the chances of a double dip recession in the US have increased as the second half of the year is expected to be even worse, reports ONE OF THE NATIONAL NEWS CHANNEL.

“Compared to six months ago when the probability of double dip was very low, right now, I expect it to be very high,” Roubini warned.

“Growth in Q2 has been revised downwards from 2.4% to 1.6%, given the construction numbers will be revised down to 1.2%,” he added.

He reasoned that based on the data the second half of the year is going to be worse than the first half 2 because all the tailwinds will become headwinds. He is concerned that if we finish Q2 with 1.2% then the second half will be worse.

“Once the growth rate is 1%, you are already in a growth recession, and then the risk is that the financial markets are going to have a downturn,” Roubini said.