S&P Lowers Economic Forecasts

S&P readjusted their U.S. economic forecasts lower for 2010, as reported in the Aug 25, Outlook. This comes as rather after the fact, considering the latest Fed announcement.

They lowered their GDP, gross domestic product, forecast for 2010 to 2.8% from the 3.1% they expected a month ago. Their 2011 GDP forecast is 2.5%. S&P attributed this mostly to the lower annual revision to the gross domestic product, GDP, data released by the government, and to the larger than expected trade deficit numbers.

S&P expect U.S. house prices to decline another 5% by early 2011. This decline would bring the S&P/Case-Shiller home price index back down to near its April 2009 trough, down 33% from its July 2007 peak.

They also said the economic outlook suggests that the Fed might not tighten until late 2011.