环球视野：站在崩溃边缘的发达国家

　　Developed economies Over the edge

　　AS RECENTLY as a month ago, there were still hopes that America and Europe might just pull back from the precipice of a recession. Those hopes have been dashed. The economies of the rich world seem to have fallen off a cliff. The question now is the height of the drop.

　　Central banks are trying to cushion the fall. On October 29th the Federal Reserve lowered its target for the federal funds rate to 1%, matching the trough it reached in 2003. It may cut again. With remarkable speed, worries have shifted from inflation, which is still around 5%, to deflation. Fed officials still think that, if even pessimistic forecasts came to pass, inflation would not fall below zero. But Macroeconomic Advisers, a forecaster, now reckons that core inflation will fall to 1.3% by 2010, too close to zero for the Fed’s comfort. They expect the Fed to cut the federal funds rate to 0.5% in December and then, with scant room for more cuts, that it may try to stimulate growth using unconventional measures such as further expanding its lending facilities to banks and other firms.

　　The rate cut was needed. America’s economic data have become starkly weaker since the bankruptcy of Lehman Brothers in mid-September. The latest GDP numbers, released on October 30th, showed that output fell by an annualised 0.3% in the third quarter. Surveys of manufacturing activity have shifted down. Weekly initial claims for unemployment benefits have shot up. A monthly index of consumer attitudes compiled by the Conference Board, a research group, plummeted to a record low of 38 in October, down from 61.4 in September.

　　Confidence surveys are unreliable predictors of consumer spending. But the destruction of wealth through falling stockmarkets and tightening credit conditions are already having an effect. On a seasonally adjusted basis, light-vehicle sales in September were the lowest since 1992, according to Autodata Corp, a research firm. On October 28th Whirlpool, an appliance maker, gave warning that low home sales would cut revenue and Royal Caribbean Cruises, a cruise operator, lowered profit estimates because of “a significant deterioration recently in new bookings”.