Finance news. My opinion.

The U.S. economy probably shrank at a slower pace in the second quarter, a sign the worst recession in half a century is winding down, economists said before a report today.

Gross domestic product contracted at a 1.5 percent annual rate from April to June after dropping 5.5 percent the prior quarter, according to the median forecast of 78 economists surveyed by Bloomberg News. The report will also include benchmark revisions for prior quarters.

Profits at companies from Caterpillar Inc. to Dow Chemical Co. show the slump is easing as government efforts to revive lending and President Barack Obama’s stimulus take hold. Consumer spending, which accounts for 70 percent of the economy, may take time to recover as job losses mount, eroding the growth analysts anticipate will start this quarter.

“We’ve definitely turned the corner but it’s going to be a slow, agonizing recovery,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “We’re just not going to get the job growth that politicians promised and people expect. The consumer doesn’t want to spend a lot.”

The Commerce Department’s report on GDP, the sum of all goods and services produced, is due at 8:30 a.m. in Washington. Survey estimates ranged from a 0.7 percent gain to a decline of 2.9 percent.

A drop would be the fourth in a row, the longest losing streak since quarterly records began in 1947. The contraction so far has been the deepest since 1957-58.

Less Spending

The report may show consumer spending dropped at a 0.5 percent pace, the third decline in the last four quarters, the survey showed.

The economy has lost 6.5 million jobs since the recession began in December 2007, and economists surveyed by Bloomberg this month forecast the jobless rate will exceed 10 percent by early 2010.

“The United States economy has found bottom but will be slow in recovering as unemployment continues to be a drag on consumer spending,” Andrew Liveris, chief executive officer of Midland, Michigan-based Dow, said in a statement yesterday.

Second-quarter profit at Dow and at Peoria, Illinois-based Caterpillar, topped analysts’ estimates. Caterpillar, the world’s largest maker of construction equipment, said last week that stimulus programs in countries such as China were helping stabilize sales cashadvance.

Slumps Easing

Recent reports showed the housing slump, which helped trigger the financial crisis last year, and the decline in manufacturing have eased. Housing starts rose in June as construction of single-family dwellings jumped by the most since 2004, Commerce reported earlier this month. Industrial production shrank in June at the slowest pace in eight months, according to figures from the Federal Reserve.

Most of the Fed’s 12 regional banks reported a slower pace of economic decline in June and July, the central bank’s regional survey of activity showed this week. Fed Chairman Ben S. Bernanke told Congress last week that there were “tentative signs of stabilization.”

Companies probably cut stockpiles further last quarter, setting the stage for recovery in production.

“With inventory levels in an ultra-lean state, businesses should start adding inventories in the second half of the year as the economy begins to show signs of life,” said Ellen Zentner, senior economist at Bank of Tokyo-Mitsubishi UFJ Ltd.

Automakers

General Motors Co. and Chrysler Group LLC, both out of bankruptcy, are among firms set to ramp up production as government efforts lift demand.

The “cash-for-clunkers” trade-in program begun this month has spurred 16,351 new-vehicle sales so far, the Transportation Department said this week. The plan has given out $68.9 million in subsidies out of the $1 billion set aside.

Economists project the economy will grow at an average 1.5 percent pace from July to December, according to a Bloomberg survey taken in early July. David Weidman, chief executive officer of Dallas-based chemical maker Celanese Corp., is among those seeing an improvement.

“We exited the quarter with increasing optimism,” as rising demand offered “clear signs of economic recovery,” Weidman said in an interview this week.

The Standard & Poor’s 500 Index and Dow Jones Industrial Average are up 12 percent since July 10 on better-than- anticipated earnings at companies from Motorola Inc. to 3M Co.

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Japanese manufacturers increased production for a fourth month in June, capping the fastest quarterly output expansion in more than half a century and helping the economy rebound from its deepest postwar recession.

Production rose 2.4 percent from May, the Trade Ministry said today in Tokyo. Output gained 8.3 percent last quarter from the first three months of 2009, the most since 1953.

Companies said they also planned to increase manufacturing in July and August to replenish inventories and meet demand spurred by more than $2 trillion in government spending worldwide. Honda Motor Co. and Nissan Motor Co. shares soared after incentives from the U.S. to China to buy fuel-efficient cars helped the automakers report earnings that beat estimates.

“You’re seeing a dramatic inventory-driven production spike,” said Richard Jerram, chief economist at Macquarie Securities Ltd. in Tokyo. “It’s a good, solid set of data; it suggests the inventory cycle is very powerful and it’s going to keep running for a few months to come.”

The yen traded at 94.97 per dollar at 11:36 a.m. in Tokyo from 95.08 before the report was published. The Nikkei 225 Stock Average rose 0.03 percent at the lunch break, and has gained 43 percent since reaching a 26-year low on March 10.

Today’s report adds to signs the deepest global recession since the Great Depression is abating. The U.S. Federal Reserve said yesterday that most of its 12 regional banks detected a slower pace of economic decline in June and July. China, South Korea and Vietnam all reported faster growth last quarter.

Honda, Nissan

Honda climbed as much as 9 percent, the most in three months, after raising its net income estimate and unexpectedly reporting quarterly profit of 7.5 billion yen ($79 million). Nissan gained as much as 8.7 percent to a nine-month high after reporting a smaller loss than analysts predicted.

The U.S., Germany and China are offering consumers credits, tax breaks and subsidies for trading in old cars for new fuel- efficient models. Japan’s own stimulus has boosted sales of environment-friendly cars like Toyota Motor Corp.’s Prius.

Manufacturers planned to boost output 1.6 percent in July and 3.3 percent in August, today’s report showed. The ministry said production is “on a recovery trend” after last month describing it as “showing signs of recovery.”

“The forecasts fuel hope that the rebound will last a bit longer than we’d thought,” said Hiroshi Shiraishi, an economist at BNP Paribas in Tokyo.

Exports Rebound

Japanese exports rose in June from May, buoyed by sales to China and the U business

New Zealand business confidence rose to a 10-month high in July as companies became less pessimistic about profits and the ease of getting credit.

A net 12.6 percent of companies surveyed this month expect sales and profits will increase over the next 12 months compared with 8.3 percent in June, according to a report released by ANZ National Bank Ltd. in Wellington today. The net figure subtracts the number of pessimists from the number of optimists.

Improving business confidence adds to signs the economy may emerge from the worst recession in three decades later this year, buoyed by record-low interest rates and a recovery in global demand. Reserve Bank Governor Alan Bollard will probably keep the benchmark interest rate unchanged at 2.5 percent tomorrow, according to all 10 economists surveyed by Bloomberg.

“The outlook is improving and so it should after six quarters of contraction,” said Cameron Bagrie, chief economist at ANZ National Bank direct payday loan lenders. “Improved confidence is an important step toward recovery and we appear to be making that first step.”

New Zealand’s dollar bought 65.83 U.S. cents at 3:18 p.m. in Wellington trading from 65.80 cents immediately before the report was released.

A net 18.7 percent of the 412 companies surveyed say the broader economy will improve compared with 5.5 percent in the June survey.

Companies are less pessimistic about profits and the ease of getting credit. Fourteen percent expect profits to fall over the next year compared with 24 percent in June.

The proportion of firms planning to fire workers fell to 6.8 percent from 17 percent.

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Federal Reserve Chairman Ben S. Bernanke said about 25 financial companies may be deemed too big to fail and subjected to additional oversight by the central bank under the Obama administration’s proposed regulatory plan.

Twenty-five is a “very rough guess,” and “virtually all of those firms” are already subject to umbrella supervision by the central bank, Bernanke said in response to a question from Representative John Campbell, a California Republican, during a House Financial Services Committee hearing today. He didn’t identify any of the companies.

Bernanke separately said the central bank’s emergency lending programs — such as to the commercial-paper market and to American International Group Inc payday loans. — are declining in size.

“We are currently as you know winding down our 13(3) programs, so I don’t anticipate they will be approaching the previous peaks,” the Fed chief said in response to a question. “I can’t anticipate what kinds of situations might arise,” he also said.

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German business confidence probably rose for a fourth month in July, suggesting Europe’s largest economy is shaking off its worst recession since World War II.

The Ifo institute in Munich will say its business climate index, based on a survey of 7,000 executives, increased to 86.5 from 85.9 in June, according to the median of 32 forecasts in a Bloomberg News survey. The index reached a 26-year low of 82.2 in March. Ifo releases the report at 10 a.m. today.

The German economy may return to growth this quarter as a global recovery boosts exports and government measures to stimulate domestic spending kick in. Manufacturing orders rose for a third month in May and industrial production surged the most in almost 16 years. The Bundesbank said July 20 that the economy shrank “only slightly” in the second quarter after its record 3.8 percent contraction in the first.

“Improving sentiment and rebounding orders suggest things will go up from here,” said Ralph Solveen, an economist at Commerzbank AG in Frankfurt. “While there won’t be a soaring recovery, we’re optimistic that we’ll see positive data for the rest of the year.”

That may provide a boost for Chancellor Angela Merkel, who will seek a second term in office in national elections in September. Her coalition government is spending about 85 billion euros ($121 billion) to revive the economy, which it predicts will contract 6 percent this year.

‘Rocky Road’

Executives’ assessment of the current situation as well as their expectations will improve, according to the survey of economists. Still, German investor confidence unexpectedly fell this month, the ZEW Center for European Economic Research said on July 14 life insurance quote.

“We still have a rocky road ahead of us and won’t reach cruising speed for some time,” said Mario Gruppe, an economist at NordLB in Hanover. “We’ll return to growth slowly. The recession has been too severe and its consequences will accompany us for several years.”

Economists at Allianz SE, Europe’s biggest insurer, this week forecast the German economy will expand 2.3 percent in both the third and fourth quarters before contracting again in the first three months of 2010.

Continental AG, the German car parts and tire manufacturer burdened with 11 billion euros of debt, on July 20 said it returned to profit in the three months through June after two quarters of losses by pursuing spending cuts.

Praktiker AG Chief Executive Officer Wolfgang Werner said July 22 that Germany’s second-largest home-improvement retailer made a “good start” to the third quarter.

Belgian business confidence rose for a fourth month in July, the central bank in Brussels said yesterday. In France, the euro area’s second-largest economy, confidence also climbed for a fourth month, Paris-based statistics office Insee said.

The European Central Bank has cut its benchmark interest rate to a record low of 1 percent, offered to lend banks as much cash as they need for up to 12 months and started buying covered bonds in a bid to unlock credit markets and restore growth in the 16-nation euro region.

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Australian consumer prices rose in the three months through June, stoking speculation the central bank has finished a record round of interest-rate cuts.

The consumer prices index gained 0.5 percent from the first quarter, when it advanced 0.1 percent, the Bureau of Statistics said in Sydney today. That matched the median estimate of 19 economists surveyed by Bloomberg. Annual core inflation was 4.2 percent, which is above the central bank’s target range.

Traders raised bets on the size of future interest-rate increases after today’s report showed costs rose for health care, household contents and clothing. Australia’s economy is better than the central bank forecast a few months ago, helped by exports to China, the lowest borrowing costs in half a century and government spending, central bank Assistant Governor Guy Debelle said today.

“It’s becoming increasingly difficult to make a case for further rate cuts,” said Stephen Walters, chief economist at JPMorgan Chase & Co. in Sydney. Policy makers will be “thinking ‘do we want policy at 3 percent when all these green shots are growing into trees?’. The answer is no,” he said.

Investors increased bets Australia’s overnight cash rate target will be higher in 12 months, according to a Credit Suisse Group AG index based on swaps trading.

Currency Rises

Traders forecast the key rate will be 88 basis points higher in a year, the index showed at 2:21 p.m. in Sydney, compared with 82 basis points of gains before today’s report was released. At the start of June, they forecast 3 basis points of reductions. A basis point is 0.01 percentage point.

Australia’s currency rose to 81.53 U.S. cents at 2:25 p.m. from 81.47 cents just before the report was released. The two- year government bond yield fell 1 basis point, or 0.01 percentage point, to 4.12 percent.

Health costs rose 2.3 percent in the second quarter and prices of household contents and services advanced 2.2 percent, today’s report showed. By contrast, banking services charges fell 1.7 percent and food slipped 0.9 percent. The annual headline inflation rate slowed to 1.5 percent from 2.5 percent.

The Reserve Bank’s core inflation measures, which exclude the largest price increases and declines, were also published today. The weighted-median gauge of inflation advanced 0.8 percent in the quarter for an annual increase of 4.2 percent, the eighth quarter that the measure has held above the Reserve Bank’s target range of between 2 percent and 3 percent fast cash loan.

Rate Cuts

“The very sticky core inflation measure means the Reserve Bank has been correct to remain on hold for the last couple of months,” said Annette Beacher, senior fixed-income strategist at TD Securities Ltd. in Singapore. “Moving aggressively last year has given them time to assess the data” this year.

Governor Stevens and his board left the overnight cash rate target at 3 percent on July 7 for a third month after cutting it by a record 4.25 percentage points between September and April.

The interest-rate cuts and A$22 billion ($18 billion) in government cash handouts to low and middle-income households are helping the economy rebound from the financial crisis, recent reports suggest.

“Monetary policy and fiscal policy are really working here,” Reserve Bank Assistant Governor Debelle told a function organized by the Mortgage and Finance Association of Australia in Melbourne today. “The economy is looking better than we thought it might a few months ago.”

Gross domestic product unexpectedly rose 0.4 percent in the first quarter from the previous three months, when it shrank 0.6 percent, unemployment has climbed less than forecast by the government, and business and consumer confidence have jumped.

Job Losses

In May, the central bank forecast the economy would shrink 1 percent this year.

The jobless rate averaged less than 5.7 percent in the June quarter, below the 6 percent predicted by the Treasury department in May. Canberra-based Access Economics forecast yesterday that the unemployment rate will peak at 7.5 percent, a percentage point lower than the government’s prediction.

Still, central bank policy makers said in the minutes of their July 7 meeting, released yesterday in Sydney, that they expect inflation will cool in coming months, increasing their scope to cut borrowing costs if needed to spur growth.

The Reserve Bank predicted in May that annual headline inflation will fall to within or below its target range this year, after holding above 3 percent in 2008. The bank is due to revise its forecasts on Aug. 7.

“The current inflation outlook afforded scope for some further easing of monetary policy, if that were needed to give further support to demand at a later stage,” yesterday’s minutes said.

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The U.S. Federal Reserve is “confident” of its ability to stem inflation after what’s likely to be an “extended period” for policies aimed at restarting lending, Chairman Ben S. Bernanke said.

“When the economic outlook requires us to do so,” the central bank will employ a series of tools to tighten policy, Bernanke said, writing in an opinion piece in the Wall Street Journal.

Bernanke outlined five ways the central bank will be able to prevent the record reserves that banks have accumulated from causing money supply and inflation to surge. Officials will use the interest rate on banks’ deposits with the Fed as a principal tool, which they can supplement with other means, including reverse-repurchase agreements and term deposits, he said.

The opinion piece, published late yesterday, before Bernanke’s semiannual monetary-policy testimony to Congress today, signals he’s seeking to reassure investors that the Fed will contain consumer prices when the economy recovers.

“Bernanke is preparing the market by communicating at an early stage,” said Seiji Shiraishi, chief economist for Japan at HSBC Securities Japan Ltd. in Tokyo. “Whether they can do that will depend on the strength of the cyclical recovery and the soundness of the banks.”

The 10-year note yield fell three basis points to 3.58 percent at 12:53 p.m. in Tokyo, according to data compiled by Bloomberg.

‘Top Priority’

The Fed said in minutes of last month’s policy meeting that making sure it has the ability to tighten credit at some point is a “top priority.” Officials discussed their options at the session, even as most policy makers judged the economy at risk to further shocks, the minutes showed last week.

“We are confident we have the necessary tools to withdraw policy accommodation, when that becomes appropriate, in a smooth and timely manner,” Bernanke said in the opinion article.

Since March 2008, the Fed has taken steps to combat the credit crisis that included expanded emergency lending to banks, support for the commercial-paper market and a lifeline to insurer American International Group Inc. Total assets on the Fed’s balance sheet now stand at $2.07 trillion, up $1.16 trillion over the past year. The central bank has also cut the benchmark lending rate to a range of zero to 0.25 percent.

Need for Strategy

Without an exit strategy, the increase in bank reserves could cause inflation because banks would be able to lend on the money, potentially fueling a surge in money growth cheap car insurance. The Fed, then, must either shrink the amount of reserves or find a way to keep banks from lending them for bigger yields.

“We will calibrate the timing and pace of any future tightening, together with the mix of tools to best foster our dual objectives of maximum employment and price stability,” Bernanke said.

To keep interest rates low and credit flowing to housing markets, the Fed plans this year to buy as much as $1.75 trillion of mortgage-backed securities, housing-agency debt and Treasuries. The last exit option, “if necessary,” would be to sell some of the securities on the open market, Bernanke said.

In a term reverse-repurchase agreement, the central bank would enter into a longer-term contract to sell securities to primary dealers, in effect removing money from the banking system temporarily, and repurchase them at a later date.

Term Deposits

The Fed’s proposed term deposits would be similar to banks’ certificates of deposit for customers, and funds held at the Fed would not be available to lend in the overnight federal funds market, Bernanke said.

Another option would be for the Treasury to sell bills and deposit the funds with the Fed, Bernanke wrote.

“Although the Treasury’s operations are helpful, to protect the independence of monetary policy, we must take care to ensure that we can achieve our policy objectives without reliance on the Treasury,” the Fed chief said.

The Fed received legislative authority to begin paying interest on reserves in October as part of legislation creating the $700 billion financial-rescue fund.

Fed officials hoped that would help keep the benchmark interest rate stable while the central bank flooded the banking system with cash. The authority failed to keep the main federal- funds rate from declining almost to zero before the Fed officially lowered it that far. The Fed currently pays 0.25 percent on required and excess reserve balances.

Banks’ deposits with the Fed increased to $772 billion in June from $9.3 billion a year earlier.

Bernanke said the deposit rate will work better “under more normal financial conditions” and limit the gap between that and the federal funds rate. “If that gap persists,” the Fed will use the other tools, he said.

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The British economy will shrink 4.4 percent in 2009 before recovering in 2010, Ernst & Young’s Item Club will say tomorrow.

The forecast by the research group, which uses the same economic model as the U.K. Treasury, is worse than the 3.5 percent contraction predicted in April. Tomorrow it will also revise up the prediction for 2010 to show the economy expanding 0.5 percent instead of shrinking 0.1 percent.

U.K. gross domestic product plunged by the most in a half- century in the first quarter, prompting the central bank to cut interest rates to a record low and start buying assets with newly created money. Bank of England Deputy Governor Charles Bean said last week that the economy may return to quarterly growth by the end of this year payday loans in one hour.

“The economic patient has been in trauma, but thanks to the paramedics at the Treasury and the Bank of England, who pumped billions of pounds worth of medicine into the economy, the patient has been stabilized for now,” Item Club Chief Economic Adviser Peter Spencer will say in a statement. “But it remains unclear how quick and complete recovery will be and there is still a serious chance of a relapse.”

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Builders in the U.S. probably broke ground on about the same number of houses in June, preserving the previous month’s surge and indicating the industry’s slump is easing, economists said before a government report today.

Housing starts fell 0.4 percent to an annual rate of 530,000 after jumping 17 percent in May, according to the median forecast of 73 economists in a Bloomberg News survey. Building permits probably increased to a 524,000 annual rate.

Lower borrowing costs and plunging prices are making houses more affordable, helping to stem the decline in sales and alleviating the worst housing slowdown since the Great Depression. Stabilization would rid the economy of the drag from declines in residential construction that have shaved almost a percentage point off growth over the last three years.

“You’re seeing a leveling off,” said Michelle Meyer, an economist at Barclays Capital Inc. in New York. “Later on in the year, if we do get the overall improvement in the economy, that will go along with an improvement in home data.”

The Commerce Department’s report is due at 8:30 a.m. in Washington. Projections in the Bloomberg News survey ranged from 479,000 to 564,000.

Construction of single-family houses, which account for 75 percent of the industry, have been rising since March after reaching a record low in the first two months of the year.

Multifamily Gyrations

Multifamily projects, which soared 62 percent in May after plunging 49 percent in April and 26 percent in March, have obscured the underlying improvement in residential construction.

“We’ve seen a pretty nice pickup in permits over the last few months and it’s really been driven by single-family,” Barclay’s Meyer said.

Another increase in single-family starts would add to signs the housing slump is nearing a bottom. Combined sales of existing and new homes climbed to a 5.1 million annual pace in May, the highest level so far this year. The Mortgage Bankers Association’s purchase applications index averaged 3 payday loan.2 percent higher in June than in the prior month.

Even so, Federal Reserve officials last month saw a danger of a renewed decline in the housing market, partly as mortgage rates increased.

“Indicators of single-family starts and sales suggested that housing activity may be leveling out, but most participants viewed the sector as still vulnerable to further weakness,” the central bank said in minutes of the Federal Open Market Committee’s June 23-24 meeting released this week.

Rates Fall

Borrowing costs have retreated once again since the Fed’s meeting. The rate on a 30-year fixed loan fell to 5.14 percent in the week ended yesterday, the lowest level in almost two months, according to figures from Freddie Mac. The rate reached a record low of 4.78 percent in late April.

The Fed minutes also showed some policy makers were concerned over the continuing “high rate” of foreclosures, fearing it would push down prices further by adding to inventories of unsold homes.

Home foreclosures rose 33.2 percent in June from a year earlier, RealtyTrac Inc. said yesterday. A record 1.5 million properties received a default or auction notice or were seized by banks in the first half of the year.

A report yesterday showed gains in sales and buyer traffic were helping make builders less pessimistic about the industry. The National Association of Home Builders/Wells Fargo index of builder confidence gained to 17 this month, the highest level since September, the Washington-based NAHB said. A reading below 50 means most respondents view conditions as poor.

Stable Sales

New-home sales likely will be little changed in coming months because of low consumer confidence and the difficulty would-be buyers have getting loans, Pulte Homes Inc. Chief Executive Officer Richard Dugas said at an investor conference June 23.

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A split among Federal Reserve officials widened last month: Depending on who is doing the forecasting, economic growth will either remain stalled next year or will accelerate to the fastest rate since 1999.

Minutes from the Fed’s June meeting show central bankers are less certain than they were in April over how the economy will emerge from the worst recession in a half century. Policy makers have differing assessments of how quickly credit markets will heal, and how effective a $787 billion fiscal stimulus and $1 trillion expansion of the Fed’s balance sheet will be, according to the Federal Open Market Committee’s minutes released yesterday.

“The committee as a whole lacks conviction about where the economy is going,” said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey. “Uncertainty has to make them slower to start warning about a turning point in policy.”

Central bankers left the benchmark lending rate in a range of zero to 0.25 percent last month and said the policy rate was likely to remain “exceptionally low” for an “extended period.”

The range of unemployment forecasts for 2010 widened in June to 8.5 percent to 10.6 percent, a 2.1 percentage point gap, from 8 percent to 9.6 percent in April.

The range of projections for 2010 growth showed a gap of 3.2 percentage points, up from a 2.5 percentage-point divide in April. The lowest forecast suggests the economy will grow just 0.8 percent from this year’s fourth quarter to the final quarter of 2010; the highest projects 4 percent growth.

‘Unreconciled Views’

“Uncertainty just lends itself to standing pat,” said Vincent Reinhart, former director of the Fed Board’s Monetary Affairs Division and a resident scholar at the American Enterprise Institute in Washington. “You have a committee in which a significant fraction have unreconciled views among themselves.”

Policy makers were concerned that consumer spending will resume its decline once temporary benefits to household income from the fiscal stimulus subside, the minutes showed health insurance quote. Some officials also saw a danger of a renewed decline in the housing market, in part as mortgage rates increase.

“Labor market conditions were of particular concern to meeting participants,” the minutes said. “With the recovery projected to be rather sluggish, most participants anticipated that the employment situation was likely to be downbeat for some time.”

Purchase Programs Unchanged

At the same time, the FOMC concluded that it was best to keep its programs for purchasing Treasuries and mortgage debt unchanged. “The effects of further asset purchases, especially purchases of Treasury securities, on the economy and on inflation expectations were uncertain,” the minutes said.

Forecasts also show members divided over whether economic growth will exceed their estimates of its long-run potential of around 2.5 percent to 2.7 percent. The difference of opinion is important because growth above potential would push down the unemployment rate faster. Unemployment stood at 9.5 percent in June, the highest since August 1983, as employers eliminated 467,000 jobs.

Growth estimates from 10 FOMC members for next year clustered in ranges above 2.7 percent, while seven were in ranges of 2.5 percent or below. The split over whether the expansion will be fast enough to restore job growth, or too slow, will complicate policy leadership for Fed Chairman Ben S. Bernanke, analysts said.

“The wide array of estimates for everything from inflation to growth and unemployment suggests that we really don’t know how this economy is going to unfold in coming months, let alone two years from now,” said Richard Yamarone, director of economic research for Argus Research Corp. in New York. “Until some of these clouds dissipate, I can’t imagine the Fed is going to take these programs off the table or change its target rate.”

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