Just when we had started to see some positive signs of recovery around us, we had another difficult day on Monday. As the Federal Reserve board convened to hash out its strategy toward the U.S. economy, the World Bank released its own report, anticipating a worldwide economic contraction of 2.9 percent this year, more than 50 percent worse than its earlier prediction of a worldwide contraction of 1.7 percent.
The World Bank increased its forecast for the shrinking of the U.S. economy from a March estimate of 2.4 percent to its current estimate of 3 percent. News like this was part of what drove all the major indexes down on Monday, with the S&P 500 and Dow Jones erasing all the gains they had made so far on the year.
On the other hand, the International Monetary Fund also released a projection for the U.S. economy on Monday, and upgraded its outlook for the U.S. After earlier forecasting that our economy would shrink by 2.8 percent in 2009, the IMF now predicts a contraction of just 2.5 percent. We'd sure like the IMF forecast to be the true one, but after the sell-off on Monday, there's no doubt about whom the markets are listening to.
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