StatsGuru 02-June-08

Many economists believe the financial crisis in the US took a turn for the better after the Bear Stearns bailout, and cite falling spreads on banking paper and the resumption of lending as evidence. It helps that US corporate balance sheets remain robust and investments are holding up. Even so, the housing overhang remains serious enough to keep consumption down; and banks are still a long way from recapitalising the losses they made after the collapse of the housing market. Employment contraction in previous recessions has been higher, suggesting US employment may contract further and a US recovery could still take another four quarters ""Warren Buffet's prediction, that the US would take a long time to come out of the recession, is worth keeping in mind.

In India, the biggest slowdown is in the manufacturing sector, probably a direct result of the RBI's policy of squeezing liquidity. Yet, the investment pipeline is strong and equity markets have begun recovering. Inflation remains a core concern as it crosses 8 per cent "" interestingly, an IMF study suggests inflation is slowing but the government isn't buying that.

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