Mid Day Update

The markets paired half their losses from this morning and is waiting on the stimulus bill.

NYSE percentage gainers
DFT, MLP, DFG, WSH, NPO, NWY, CMG, BWA, WXS

NASDAQ percentage gainers
DISK, PSBC, TFCO, BWLD, ATRO, CFFC, NSHA, ASIA, FLML

NYSE percentage losers
TEX, EDU, GIL, ICO, IRE, AIB, CNB, GLT, CSB, MTH

NASDAQ percentage losers
PACR, NARA, SCOR, FNBN, INSP, PFBC, SBLK, USTP, ELOS, LNBB

PPT Strong buy category
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113 ACET 3.24 16.13% 1.57% Upgraded to BUY
114 ACL 3.25 16.91% 24.14% Upgraded to BUY
115 ALK 3.41 18.82% -7.84% Upgraded to BUY
116 AMED 3.26 30.92% 13.19% Upgraded to BUY
117 AMSF 3.33 16.84% -18.98% Upgraded to BUY
118 AMV 3.16 8.22% -5.30% Upgraded to BUY
119 ANN 3.05 18.22% 5.56% Upgraded to BUY
120 ANW 3.05 4.81% 0.00% Upgraded to BUY
121 ASTE 3.12 18.18% -10.20% Upgraded to BUY
122 AVAV 3.01 1.69% -22.82% Upgraded to BUY
123 AZK 3.12 13.04% 12.82% Upgraded to BUY
124 BECN 3.18 24.22% 13.57% Upgraded to BUY
125 BIIB 3.16 12.06% -9.09% Upgraded to BUY
126 BMA 3.10 14.39% 8.80% Upgraded to BUY
127 BVN 3.41 19.65% 6.95% Upgraded to BUY
128 BWA 3.31 34.55% -16.56% Upgraded to BUY
129 CBZ 3.32 12.93% -11.70% Upgraded to BUY
130 CCK 3.22 41.23% 0.94% Upgraded to BUY
131 CERN 3.05 10.91% -6.44% Upgraded to BUY
132 CHE 3.07 5.14% 3.73% Upgraded to BUY
133 CMG 3.41 16.38% 5.57% Upgraded to BUY
134 COO 3.40 17.65% -0.32% Upgraded to BUY
135 CPBY 3.08 12.00% -1.91% Upgraded to BUY
136 CSR 3.04 12.18% -19.17% Upgraded to BUY
137 CTSH 3.29 30.04% -9.94% Upgraded to BUY
138 DLM 3.27 13.54% 23.95% Upgraded to BUY
139 DRI 3.69 33.21% -6.89% Upgraded to BUY
140 DTV 3.07 6.60% 12.87% Upgraded to BUY
141 DVA 3.14 5.37% 20.34% Upgraded to BUY
142 EPIQ 3.07 6.23% -8.63% Upgraded to BUY
143 ERES 3.05 10.91% -14.08% Upgraded to BUY
144 ETP 3.06 34.80% -8.17% Upgraded to BUY
145 FFH 3.27 11.22% -19.26% Upgraded to BUY
146 FIS 3.08 15.36% 6.16% Upgraded to BUY
147 FOR 3.04 10.14% 11.44% Upgraded to BUY
148 FRX 3.12 5.05% -7.16% Upgraded to BUY
149 FST 3.34 24.16% -17.70% Upgraded to BUY
150 FSTR 3.04 13.43% -12.39% Upgraded to BUY
151 G 3.22 29.84% -13.82% Upgraded to BUY
152 GPRO 3.24 14.89% 3.85% Upgraded to BUY
153 GQN 3.12 7.22% -11.61% Upgraded to BUY
154 HWAY 3.04 13.43% 10.55% Upgraded to BUY
155 INSU 3.03 1.34% -8.73% Upgraded to BUY
156 ISIL 3.41 22.66% -24.05% Upgraded to BUY
157 LL 3.27 28.74% -16.77% Upgraded to BUY
158 LNCE 3.12 9.47% 48.10% Upgraded to BUY
159 MANH 3.07 10.83% -6.12% Upgraded to BUY
160 MANT 3.26 17.27% -14.45% Upgraded to BUY
161 MFLX 3.03 1.34% -9.04% Upgraded to BUY
162 MRH 3.32 13.31% 11.45% Upgraded to BUY
163 MTRX 3.10 13.14% -5.49% Upgraded to BUY
164 NAFC 3.19 35.17% 29.27% Upgraded to BUY
165 NAQ 3.12 24.80% 7.96% Upgraded to BUY
166 NAT 3.02 18.90% -6.21% Upgraded to BUY
167 NCTY 3.08 12.00% -2.84% Upgraded to BUY
168 NED 3.01 18.97% -3.53% Upgraded to BUY
169 NEM 3.03 3.41% -9.70% Upgraded to BUY
170 NICE 3.17 14.03% 15.33% Upgraded to BUY
171 NPO 3.16 12.86% 1.94% Upgraded to BUY
172 NRG 3.05 5.54% -11.85% Upgraded to BUY
173 NSH 3.52 28.94% -14.76% Upgraded to BUY
174 OMPI 3.10 15.67% -12.20% Upgraded to BUY
175 PAA 3.25 20.82% -0.32% Upgraded to BUY
176 PAS 3.15 7.14% -1.57% Upgraded to BUY
177 PEET 3.03 5.57% -15.84% Upgraded to BUY
178 PENN 3.05 18.68% -12.61% Upgraded to BUY
179 PRE 3.26 12.41% 14.39% Upgraded to BUY
180 PZZA 3.04 25.62% -13.09% Upgraded to BUY
181 QSII 3.08 32.76% 11.59% Upgraded to BUY
182 RBY 3.19 25.59% 55.61% Upgraded to BUY
183 RMD 3.09 8.42% -5.52% Upgraded to BUY
184 RNR 3.10 25.00% 27.57% Upgraded to BUY
185 SAI 3.14 18.05% -23.39% Upgraded to BUY
186 SGU 3.03 2.02% -5.61% Upgraded to BUY
187 SIMG 3.35 28.35% 13.56% Upgraded to BUY
188 SMHG 3.08 7.69% -10.93% Upgraded to BUY
189 SSI 3.13 23.72% 12.59% Upgraded to BUY
190 STAR 3.28 23.31% -5.20% Upgraded to BUY
191 SYT 3.04 2.36% -7.88% Upgraded to BUY
192 TCW 3.12 11.83% -8.50% Upgraded to BUY
193 TDC 3.26 18.12% 12.80% Upgraded to BUY
194 TDS 3.23 17.45% 18.32% Upgraded to BUY
195 TECH 3.17 22.87% -10.23% Upgraded to BUY
196 TNE 3.30 23.13% -11.49% Upgraded to BUY
197 TRV 3.41 29.17% -1.73% Upgraded to BUY
198 TSO 3.33 12.12% -14.06% Upgraded to BUY
199 UGP 3.02 13.11% -9.85% Upgraded to BUY
200 UTEK 3.47 16.05% 24.55% Upgraded to BUY
201 VLCCF 3.30 15.79% 13.60% Upgraded to BUY
202 VPHM 3.19 11.54% 4.12% Upgraded to BUY
203 VR 3.15 9.38% -8.43% Upgraded to BUY
204 WMS 3.05 11.31% 13.38% Upgraded to BUY
205 WNR 3.18 7.07% 11.19% Upgraded to BUY
206 WXS 3.48 29.85% 0.34% Upgraded to BUY
207 KUB 3.47 32.95% 30.74% Upgraded to BUY
208 SCR 3.01 16.22% 6.36% Upgraded to BUY
209 CSKI 3.02 1.34% -6.21% Upgraded to BUY

PPT upgraded to a sell category
AATI 2.59 48.85% 24.64% Upgraded to SELL
2 ACAT 2.33 20.10% 7.44% Upgraded to SELL
3 AFCE 2.18 9.55% -2.68% Upgraded to SELL
4 AGO 2.49 27.04% 2.18% Upgraded to SELL
5 AHC 2.27 15.23% -9.44% Upgraded to SELL
6 AHS 2.15 9.69% -30.66% Upgraded to SELL
7 ALJ 2.09 5.03% -15.74% Upgraded to SELL
8 ALXN 2.05 43.36% 22.75% Upgraded to SELL
9 AMR 2.04 13.33% -10.19% Upgraded to SELL
10 AMWD 2.24 21.08% 22.40% Upgraded to SELL
11 ATAC 2.24 13.71% -2.61% Upgraded to SELL
12 BBY 2.18 9.55% -27.60% Upgraded to SELL
13 BOKF 2.15 8.04% -20.37% Upgraded to SELL
14 CALD 2.10 8.25% 16.02% Upgraded to SELL
15 CALM 2.21 16.32% -21.17% Upgraded to SELL
16 CBRL 2.17 9.60% -21.94% Upgraded to SELL
17 CFNL 2.15 14.36% 6.44% Upgraded to SELL
18 CORS 2.22 14.43% 8.33% Upgraded to SELL
19 CS 2.17 16.67% -14.57% Upgraded to SELL
20 CSV 2.01 17.54% -11.84% Upgraded to SELL
21 CTC 2.16 9.64% -18.49% Upgraded to SELL
22 DPS 2.28 16.92% -28.78% Upgraded to SELL
23 DY 2.13 8.12% -12.40% Upgraded to SELL
24 ENTR 2.33 36.26% -2.93% Upgraded to SELL
25 ESSA 2.31 20.31% 1.77% Upgraded to SELL
26 FRG 2.10 9.95% 9.42% Upgraded to SELL
27 GAIA 2.33 36.26% -30.68% Upgraded to SELL
28 GHDX 2.07 21.05% -5.48% Upgraded to SELL
29 HLYS 2.07 15.00% 16.29% Upgraded to SELL
30 HNT 2.16 26.32% -1.37% Upgraded to SELL
31 IBKC 2.08 8.33% -21.59% Upgraded to SELL
32 ID 2.17 14.81% -8.12% Upgraded to SELL
33 IILG 2.02 2.02% -3.37% Upgraded to SELL
34 IMA 2.33 18.27% 26.63% Upgraded to SELL
35 INDB 2.03 2.53% -10.27% Upgraded to SELL
36 ININ 2.12 9.28% -13.11% Upgraded to SELL
37 IRE 2.03 2.01% -20.78% Upgraded to SELL
38 IRF 2.01 3.61% -24.08% Upgraded to SELL
39 IRS 2.07 8.38% -13.39% Upgraded to SELL
40 ISPH 2.16 12.50% 0.94% Upgraded to SELL
41 ISRG 2.09 10.00% -22.59% Upgraded to SELL
42 IVN 2.35 23.04% -6.37% Upgraded to SELL
43 JRN 2.07 15.64% -17.00% Upgraded to SELL
44 KBW 2.07 15.00% -23.62% Upgraded to SELL
45 LGND 2.39 61.49% 38.95% Upgraded to SELL
46 LINE 2.13 12.70% -4.91% Upgraded to SELL
47 LIOX 2.02 2.02% 16.76% Upgraded to SELL
48 LMDIA 2.28 15.15% 2.70% Upgraded to SELL
49 LPS 2.79 46.07% 16.32% Upgraded to SELL
50 LRY 2.10 6.06% -21.05% Upgraded to SELL
51 LSTR 2.02 2.54% -27.86% Upgraded to SELL
52 LXRX 2.03 3.57% -16.47% Upgraded to SELL
53 MDAS 2.14 8.08% -6.99% Upgraded to SELL
54 MEND 2.10 8.25% 0.00% Upgraded to SELL
55 MENT 2.02 15.43% -16.87% Upgraded to SELL
56 MGA 2.04 8.51% -23.88% Upgraded to SELL
57 MGAM 2.22 21.31% 22.10% Upgraded to SELL
58 MHGC 2.03 2.53% 8.65% Upgraded to SELL
59 MLNX 2.26 13.57% -3.83% Upgraded to SELL
60 MNTA 2.04 21.43% 12.71% Upgraded to SELL
61 MPW 2.02 5.21% -22.69% Upgraded to SELL
62 MV 2.11 18.54% -28.17% Upgraded to SELL
63 MXGL 2.17 16.04% -17.62% Upgraded to SELL
64 NANO 2.01 6.35% 9.24% Upgraded to SELL
65 PALM 2.61 41.08% -18.73% Upgraded to SELL
66 PCCC 2.33 21.99% -6.80% Upgraded to SELL
67 PLXT 2.01 3.61% -10.63% Upgraded to SELL
68 PRKR 2.22 26.86% 4.12% Upgraded to SELL
69 RACK 2.13 9.79% 8.67% Upgraded to SELL
70 RAX 2.01 3.61% -23.86% Upgraded to SELL
71 RDY 2.07 15.64% -20.08% Upgraded to SELL
72 REDF 2.03 2.01% -15.13% Upgraded to SELL
73 RIGL 2.23 19.25% 4.68% Upgraded to SELL
74 RODM 2.41 26.84% -2.43% Upgraded to SELL
75 RTIX 2.01 2.03% -29.82% Upgraded to SELL
76 S 2.13 18.33% 10.36% Upgraded to SELL
77 SBKC 2.01 8.06% -11.84% Upgraded to SELL
78 SEE 2.03 2.01% -18.47% Upgraded to SELL
79 SGMO 2.13 41.06% -9.75% Upgraded to SELL
80 SIMO 2.03 2.01% -22.09% Upgraded to SELL
81 SKY 2.11 7.65% -11.02% Upgraded to SELL
82 SNDK 2.01 9.84% -29.39% Upgraded to SELL
83 SNMX 2.05 15.82% 25.00% Upgraded to SELL
84 SNP 2.12 15.85% -17.83% Upgraded to SELL
85 SNTS 2.40 26.32% 0.00% Upgraded to SELL
86 SPRT 2.01 2.03% -13.73% Upgraded to SELL
87 STAA 2.04 15.25% -27.86% Upgraded to SELL
88 STBA 2.12 8.16% -23.91% Upgraded to SELL
89 STSI 2.02 8.60% 23.17% Upgraded to SELL
90 TCB 2.01 2.03% -24.91% Upgraded to SELL
91 TCBI 2.01 2.03% -20.55% Upgraded to SELL
92 TECUA 2.18 14.14% 2.83% Upgraded to SELL
93 THRX 2.05 8.47% -30.48% Upgraded to SELL
94 TOMO 2.62 39.36% 29.35% Upgraded to SELL
95 TPP 2.17 44.67% 2.84% Upgraded to SELL
96 TRE 2.36 26.88% 5.31% Upgraded to SELL
97 TSCM 2.23 14.36% -15.97% Upgraded to SELL
98 TSU 2.36 21.65% 8.26% Upgraded to SELL
99 UCBI 2.01 2.03% -2.90% Upgraded to SELL
100 UNS 2.09 14.84% 1.97% Upgraded to SELL
101 URI 2.03 2.53% -20.39% Upgraded to SELL
102 VGR 2.16 9.64% -18.78% Upgraded to SELL
103 VISN 2.04 10.27% -19.37% Upgraded to SELL
104 VMED 2.23 12.06% -3.04% Upgraded to SELL
105 VNO 2.07 5.61% -21.59% Upgraded to SELL
106 WIN 2.01 2.55% -13.36% Upgraded to SELL
107 WNC 2.03 8.56% -24.72% Upgraded to SELL
108 WRI 2.08 5.05% -16.13% Upgraded to SELL
109 WSII 2.08 23.08% 24.55% Upgraded to SELL
110 WWE 2.41 21.11% -7.79% Upgraded to SELL
111 WWWW 2.13 3

Trying to stop foreclosures the White House is looking to buy bad mortgages.

The White House is considering a proposal to head off potentially millions more home foreclosures by using federal funds to buy up at-risk loans and then refinance them with more affordable terms.

Treasury Secretary Timothy Geithner and other Obama administration officials met Wednesday with a group of top bankers, community groups and financial industry representatives to discuss the plan.

So far, government efforts to prevent foreclosures have focused on pressing the lending industry to work with at-risk homeowners voluntarily and provide them with more affordable payment terms. But the new proposal signals a shift to a more direct government approach, according to John Taylor, president of the National Community Reinvestment Coalition, who attended the meeting with Geithner, Housing and Urban Development Secretary Shaun Donovan and other Obama administration officials.

“What they heard from all segments of the industry is nearly universal support for going in and purchasing these loans,” said Taylor.

The proposal is one of several being discussed as the White House completes the details of its comprehensive plan to stabilize the financial system and limit a wave of new foreclosures expected over the next few years. Others include legislation to speed up loan modifications and efforts to make new mortgages more affordable.

Under the proposal, the government would draw on $50 billion in funds already approved for the financial bailout to buy up millions of mortgages at a discount. A $300,000 mortgage on a house now worth $200,000, for example, might be bought at a 30 percent discount.

The homeowner then would be able to refinance the smaller mortgage with lower monthly payments. The government could then sell the loan back to investors, freeing money to buy more loans.

The new approach could eliminate one of the biggest roadblocks that has stymied the government efforts to buy up so-called “toxic assets” that are clogging the financial system. Trading in these securities — backed by thousands of loans — has all but shut down because banks, investors and potential buyers are unable to predict their future value. But individual loans are much easier to value, making government purchases more practical, according to the plan’s proponents.

Taylor estimates that of the roughly 10 million to 12 million households facing foreclosure over the four years, about 4 million to 5 million would be able to keep their homes. The plan would also help clear distressed mortgages from the financial system and free up more lending, said Taylor.

“These investors have suffered this loss — they just haven’t realized it yet,” he said. “It’s an unrealized loss that the government takes and then converts it into a gain for millions of homeowners.”

A spokesman for the Dept. of Housing and Urban Development confirmed that the White House is considering a plan to buy up bad loans directly. Treasury officials were unavailable for comment.

White House officials this week stressed the urgency of acting to shore up the nation’s banking system to avert a potential “catastrophe.” But slowing the pace of foreclosures is essential to reducing the glut of homes on the market and resolving the crisis, according to Columbia University economics professor Christopher Mayer.

“We’ve got to deal with housing,” he said, ”because, look, if housing drops another 20 to 25 percent, I can promise you a lot more of these mortgages are going bad, and we’re going to have a much bigger problem.”

Some 275,000 foreclosure filings were reported in January — or about one in 466 households — an 18 percent increase over January 2008, according to data released by RealtyTrac Thursday. The pace slowed 10 percent from December, largely because of a temporary freeze on new foreclosure filings by several states and mortgage giants Fannie Mae and Freddie Mac, RealtyTrac reported.

On Wednesday, the Office of Thrift Supervision urged lenders under its regulation to suspend foreclosures on owner-occupied homes until the White House completes its mortgage relief program. As of the third quarter of 2008, the roughly 800 lenders regulated by the office had an outstanding mortgage portfolio of more than a half-trillion dollars.

To date, industry efforts to halt the pace of foreclosures have proved inadequate. In congressional testimony Wednesday, CEOs of the nation’s top banks told of hundreds of thousands of loans modified to date.

But according to the Office of the Comptroller of the Currency, more than half of the 287,755 mortgage workouts in the third quarter of 2008 involved repayment plans that, in many cases, increased the monthly cost of the loan to make up for missed payments. That’s one reason more than half of borrowers who had worked out new mortgage terms redefault within six months, according to the OCC, which regulates nationally charted banks.

Rick Sharga from Realty Trac

Surprise retail sales up 1%

Feb. 12 (Bloomberg) — Sales at U.S. retailers unexpectedly halted a record six-month slide in January, reflecting higher gasoline prices and more spending on items such as clothing and food.

The 1 percent increase followed a revised 3 percent drop the prior month, the Commerce Department said today in Washington. Purchases excluding automobiles gained 0.9 percent.

Consumer spending, about 70 percent of the economy, is likely to resume shrinking as the year progresses, according to a separate monthly Bloomberg News survey, capping the longest slide on record. Lawmakers are aiming to shore up the economy with a $789 billion stimulus package that’s designed to create 3.5 million new jobs.

“Gasoline prices firmed up over the months and so did sales at gasoline stations,” Ellen Zentner, a senior U.S. economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said before the report. Overall, “consumer spending is on the skids.”

Stock-index futures pared their decline and Treasuries dropped. Contracts on the Standard & Poor’s 500 Stock Index were down 0.4 percent at 8:40 a.m. in New York after dropping as much as 1.3 percent earlier. Yields on benchmark 10-year notes were at 2.78 percent, compared with 2.75 percent late yesterday.

Economists’ Forecasts

Retail sales were projected to fall 0.8 percent after an initially reported 2.7 percent drop the prior month, according to the median estimate of 72 economists in a Bloomberg News survey. Forecasts ranged from a decline of 2.2 percent to a 0.7 percent gain.

Sales excluding automobiles were forecast to decrease 0.4 percent from the prior month, according to the survey median.

The figures aren’t adjusted for inflation, so price increases can influence the data. The average cost of a gallon of regular gasoline last month rose by 10 cents to $1.78 a gallon, according to AAA.

Receipts at filling stations increased 2.6 percent in January, the first gain in six months, following a 16 percent decline in December.

Today’s report showed sales at automobile dealerships and parts stores rose 1.6 percent, the first gain since August, after decreasing 2 percent.

Outlook for Autos

Still, demand for automobiles has softened as banks tighten lending standards and consumers hunker down. Sales plunged 55 percent at Chrysler LLC and sank 49 percent at General Motors Corp. last month as car loans became scarce after credit seized up late last year.

If consumers “can’t get credit, you can’t sell vehicles,” Mark LaNeve, GM’s sales chief, said in an interview Feb. 3. “This is what is choking us to death.”

Excluding autos, gasoline and building materials, the retail group the government uses to calculate gross domestic product figures for consumer spending, sales rose 1.2 percent in January, following a 1.7 percent decrease in December. The government uses data from other sources to calculate the contribution from the three categories excluded.

Sales also rose for electronics, appliances, clothing and food and beverages. Sales declined at building materials stores, furniture outlets and department stores.

Purchases at non-store retailers, which include online and catalog sales, rose 2.7 percent.

Annual Drop

Retailers are nonetheless bracing for the first annual drop in sales in at least 14 years, according to the National Retail Federation. January same-store sales dropped 1.6 percent from a year ago, the International Council of Shopping Centers reported last week.

Consumer spending is set to contract again this quarter after falling in the second half of 2008, economists predict. Purchases haven’t declined for three consecutive three-month periods since records began in 1947.

The world’s largest economy may contract at a 5.5 percent annual pace this quarter after shrinking at a 3.8 percent rate in the last three months of 2008, according to a forecast by economists at Morgan Stanley in New York. Last quarter’s drop was the biggest since 1982.

The unemployment rate jumped to 7.6 percent in January, the highest level since 1992, the Labor Department said last week. Payrolls plunged by 598,000, bringing the total number of jobs lost over the last 13 months to 3.6 million.

Retailers are slashing staff as they forecast declining sales. Macy’s Inc., the second-largest U.S. department-store company, is eliminating 7,000 jobs after discounts of 60 percent failed to stem revenue declines during the worst holiday season in four decades.

“Reducing our workforce is an unfortunate outcome of the current economic environment,” Chief Executive Officer Terry Lundgren said in a statement last week.

Worst downturn since1946 will not be stopped

Feb. 12 (Bloomberg) — President Barack Obama’s stimulus plan will be insufficient to avert the biggest U.S. economic decline since 1946 as consumer spending posts its longest slide on record, according to a monthly Bloomberg News survey.

The world’s largest economy will contract 2 percent this year, half a percentage point more than last month’s forecast, according to the median of 50 projections in the survey taken Feb. 2 to Feb. 10. Even as Obama aims to create 3.5 million jobs with a stimulus plan, economists foresee an unemployment rate exceeding 8 percent through next year.

The forecasts underscore the urgency of a financial rescue that unthaws credit markets to spur business and consumer spending, analysts said. A prolonged economic slump means the Federal Reserve will keep its main interest rate below 1 percent for the next two years, the survey indicated.

“Without the stimulus, I think we would be negative for all four quarters of 2009,” causing an even worse decline, said Nigel Gault, chief U.S. economist at IHS Global Insight Inc. in Lexington, Massachusetts. Even with Obama’s plan, consumer spending and the labor market are “spiraling down together,” he said.

Economists said they took into account a stimulus of about $800 billion as they assembled their forecasts. The estimates were submitted before House and Senate lawmakers yesterday reached agreement on a $789 billion bill that includes a mix of tax cuts and government spending. Final passage by both bodies is still needed before Obama can sign it.

Quarterly Forecasts

U.S. gross domestic product will shrink at a 5 percent annual rate in the first three months of this year, with a 1.7 percent contraction from April through June, more than double the last forecast, according to the survey median. That would cap four consecutive quarters of decline, the worst performance since postwar record-keeping began.

All growth forecasts were lower than in the previous monthly survey. The economy is projected to eke out a 1.9 percent expansion next year, followed by 2.9 percent growth in 2011.

Economists estimated odds that the economy will be out of the recession in the next 12 months at 53 percent, down from 55 percent in January, the survey showed. The slump began in December 2007, according to the National Bureau of Economic Research in Cambridge, Massachusetts.

Fed Policy

The Fed’s benchmark interest rate, currently ranging from zero to 0.25 percent, is expected to remain at record-low levels through the end of the year, the survey showed. The Fed rate will rise to 0.5 percent next year and then 1 percent in 2011, economists said. Last month’s survey projected the rate would rise to 1 percent in 2009 and 1.5 percent the next year.

Consumer spending may fall at a 2.7 percent pace this quarter after dropping 3.5 percent in the last three months of 2008, according to the survey. Purchases have never declined for more than three consecutive quarters, according to the data.

Companies from Wal-Mart Stores Inc. to General Motors Corp. this week announced cuts to their payrolls, highlighting the broad reach of the recession.

FedEx Corp., the second-largest U.S. package-delivery company, said it will eliminate 900 jobs in its freight unit.

“The pricing environment has become even more aggressive as the same number of carriers compete for a shrinking base of business,” said Maury Lane, a FedEx spokesman.

Deflation Worries

Prices are moderating as the economy slows. The Fed’s preferred inflation gauge, based on consumer spending and excluding food and fuel costs, will rise 1.2 percent this year, the least since 1962, according to the survey median.

That increase would be less than the long-term forecast of 1.3 percent to 1.7 percent that reflects Fed policy makers’ expectations for the level of inflation given “appropriate” monetary policy.

The retreat in inflation now surpasses the one in 2003, when the Fed was last concerned about the threat of deflation, or a prolonged decline in prices that erodes profits and makes debts harder to repay.

A deteriorating labor market is causing Americans to retrench and spend less. The unemployment rate is forecast to climb to an average 8.4 percent this year and 8.5 percent next year before retreating to 7.9 percent in 2011.

Job Cuts

“Even if you don’t lose your job you’re less likely to go out and spend, because you’re more likely to be worried about your job,” said Mark Vitner, a senior economist at Wachovia Corp. in Charlotte, North Carolina. “Job cuts are going to continue right into 2010.”

The U.S. lost has lost about 3.6 million jobs since the downturn started. The jobless rate rose to 7.6 percent last month, the highest level since 1992, from 7.2 percent in December, the Labor Department said last week.

The federal budget deficit as a percentage of GDP will average 10 percent this year, a postwar high, analysts said, as the administration spends to tackle the recession.