Moody’s Lowers Economic Growth Outlook

Whoop...Moody's said something bad about our economy. Fire up the Senate inquisitors!

Wall Street Journal -

Moody’s Analytics said its near-term outlook for the U.S. economy has fallen significantly in the past month wake of the debate over the U.S. debt ceiling and the downgrade of the nation’s credit ratings by Standard & Poor’s .

Moody’s Analytics, a sister company to credit-ratings company Moody’s Investors Service, now expects real gross domestic product to increase at an annualized rate of about 2% in the second half of this year and just over 3% next year, compared with its estimate a month ago for growth of 3.5% for the second half of this year and through 2012.

Meanwhile our current growth is a paltry 0.4%...not sure where they're getting these numbers from, but...well I do, actually. They're making them up. Because even when they tell you things are bad, they're lying. Things are worse than bad. But if you knew this, you might take steps to protect what you own, and then they can't rob you.

The firm attributes most of the expected decline to a loss of business, investor and consumer confidence, noting the economy’s improving fundamentals such as the strengthening of business’s balance sheets and consumers’ strides in cutting household debt.

The credit-rating company also said it thinks the odds of a renewed recession over the next 12 months — now at 1 in 3 — will increase if stock prices continue to fall. Moody’s maintains that the odds of a renewed recession rise with each 100-point drop in the Dow Jones Industrial Average. While Moody’s expects the economic recovery will continue, prospects for economic growth and job creation have “diminished substantially.”

Though the U.S. economic recovery looked healthy at the beginning of the year, a series of events have hurt business, consumer and investor confidence, Moody’s said. These include surging prices for food and gasoline, natural disasters in Japan, Europe’s debt crisis and, most recently, the U.S. debt woes.

The economy needs to grow 2.5% to 3% a year to create jobs fast enough to keep the unemployment rate stable, Moody’s said. However, Moody’s said it doesn’t think this will happen soon.