Will Credit-Market Turmoil Stifle Growth?
                                                                 by Phil Izzo

    Most economists expect the turmoil in credit markets to have just a minor impact on growth, but they cut their economic forecasts and nearly a third expect higher borrowing costs to be a significant contributor to a slowdown.
    The latest WSJ.com economic forecasting survey was conducted with the economy in a precarious spot amid the downturn in the housing market and a credit crunch that started in the subprime-mortgage market and has since spread to some other quarters of the credit markets. Economists were surveyed Aug. 3-7, before new turbulence emerged today, when the European Central Bank and, to  lesser degree, the Federal Reserve injected cash into the banking system.
    Thirty-five of 54 economists who answered the question said they believe the turmoil in the credit markets will increase  companies' borrowing costs for some time but have just a minor impact on the economy. Seventeen, or 31%, said they believe borrowing costs will rise for a sustained period and be a significant contributor to an economic slowdown. Only two said it would have no impact on the economy.
    "We'll get through this," said Diane Swank at Mesirow Financial." But the risks are still there, and they're higher than they were a month ago."
    The Fed earlier this week acknowledged that credit-market turmoil is darkening the economic outlook. "Financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing," it said.
    In the survey of 60 private-sector economists, most economists said they believe that the worst of the housing bust has passed. But the number of economists who hold that view has dwindled over recent months. This month, 64% said they felt that way, down from 74% who said the worst was over when asked in June, and 80% when surveyed in March.
    Forecasts for gross domestic product, the broadest measure of economic output, were reduced slightly for this year and next. And the economists raised their forecasts for the probability of recession over the next 12 months. It climbed to 28% up from 23% in the June survey and the highest level in several years.
    On average, economists expect growth at a 2.3% annual rate this quarter and 2.5% in the fourth quarter. For the year as a whole, they expect growth of 2.2% and for 2008 they put growth at 2.8%. Both annual forecasts were cut by one-tenth point from the prior survey in June.

turmoil n. 騷擾;騷動;煽動
impact n. 碰撞;相撞, 衝擊力
significant adj. 有意義的, 意味深長的
contributor vi.,vt. 頁獻, 捐款;捐助, 投稿(如一篇故事、文章等)
conduct vt. 引導, 指導;管理;經營
precarious adj. 危險的;不安全的
crunch n.【俚】壓力和緊張情勢, 關鍵;轉捩點;危機
spread vt. 鋪;塗;敷
turbulence n. 騷動;騷亂
inject vt. 推入;注射(液體)
sustained adj. 持久的;始終如一的
volatile adj. 易蒸發的;易揮發的, 易變的;無常的
correction n. 改正;修改, 訓誡;懲罰
ongoing adj. 正在發生的
sector n. 【幾】扇形, (城市的)一部分;地區, 【軍】戰區
dwindle  vi. 漸小;減少;縮小
recession n. 引退;退隱;告老, 【經】蕭條;不景氣
annual adj. 每年的;年度的;一年一次的
tenth n. 第十
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