Economy won’t rebound until mid-'02

The U.S. economy will not see a significant rebound in growth before the middle of next year, Federal Reserve Bank of San Francisco president Robert Parry told Reuters today. "It is very difficult to say when in 2002 the economy is going to turn. I think it will turn positive in 2002 – my guess is it could be sometime toward the end of the first half," Parry said. "Our forecast says that there is a likelihood of a further fall in the first quarter and then a mild positive in the second." With most U.S. economists certain the economy has already sunk into recession, Parry reiterated comments from last week that the central bank had room to lower interest rates even further if needed.According to Reuters, Parry told a real estate and economics conference he expected three straight quarters of contraction in gross domestic product and predicted a return to growth sometime next year. Last week Parry said it was possible the country could see two negative quarters next year. Parry said the economy would likely contract more sharply in the fourth quarter of this year than the 0.4% shrinkage seen in the third quarter. He said the terrorist attacks of September 11 on the United States probably tipped the economy into a contraction. Although long-term prospects remain good, the jobless rate would likely rise further from its current 5.4% level, he said.