Monday, May 01, 2006

Lamy calls for trade deal revival BBC (UK)

In the first quarter of 2006 the US economy grew at its fastest rate in two and a half years, according to the Commerce Department. Growth was boosted by government spending to deal with damage from last year's Gulf Coast hurricanes. Earlier this week, the Federal Reserve chairman said he expected growth to slow to a more sustainable level.

"With crude oil prices soaring and China investing in new export capacity at a breakneck pace, the trade deficit will continue to pull down U.S. growth," said Peter Morici, a University of Maryland economist. "Without a devaluation of the dollar against the Chinese yuan, U.S. growth will slow significantly in the second half of this year."

What does this mean for consumers? Brian Fabbri, chief economist at BNP Paribas in New York said "..consumers feel happy but they are beginning to become a little less happy about gasoline price increases. This is not a big move in confidence but it does say that confidence is probably levelling off and would probably continue to do so while gasoline prices go up."

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