HispanicBusiness

At the risk of speaking too soon, it can be said, aside from some ominous inflationary signs, that policymakers have achieved the soft landing for the U.S. economy they promised.

The economy grew at a meager rate of 0.6 percent during the last two quarters, but we are not yet in an 'official' recession. Credit market conditions, still far from normal, have stabilized as a consequence of active lending by the Federal Reserve. The stimulus of tax rebates and repeated interest rate cuts also seems to be helping. Additionally, the U.S. dollar has firmed and home prices are expected to stop falling by the end of the year.
Ominous signs persist in the outlook due to relentless increases in the prices of oil, food and most imports.

As a result, consumer confidence has fallen to the lowest point in 28 years. In early May, the Reuters/University of Michigan index of consumer confidence decreased from 62.6 to 59.5, the lowest level since June 1980.

A decrease in the prices of oil and food is not likely. Some analysts, such as the investment bank Goldman Sachs, project that crude oil prices will reach between U.S. $150-$200 per barrel by next October, which means that gasoline prices should reach at least $4.50 for regular.

The soft landing is indeed better than a free-fall, but sluggishness is not cause for celebration.

Isaac Cohen is the former director of the Washington Office of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). He is currently a commentator on economic and financial issues for CNN en Espaņol TV and radio.