Yellen prophesies rough road ahead

The U.S. economy appears to be in a recession, San Francisco Federal Reserve Bank president Janet Yellen said yesterday, according to published reports. She made the remark in a speech to the Financial Executives International Silicon Valley chapter in Palo Alto, Calif. The just-completed third quarter will yield no growth in the gross domestic product, Ms. Yellen predicted. Weak growth will also continue into coming months, perhaps leading to a contraction in the fourth quarter, she added. “The outlook for the U.S. economy has weakened noticeably, and inflationary pressures have substantially abated,” she said in her speech. “Virtually ever major sector of the economy has been hit by the financial shock.” As a result, the borrowing, spending and hiring decisions of households, firms and governments have been pulled into the whirlpool created by the foundering financial markets, she said. “It is because of such impacts that the turmoil in financial markets affects the prospects for growth and job creation in the months and years ahead,” Ms. Yellen noted.