As Economy Wilts, Investors Await Bernanke Speech

By: Dan Weil

Investors are waiting with baited breath to see what Federal Reserve Chairman Ben Bernanke has to say in his speech about the economy at a Fed symposium Friday.

It will be his first public remarks since the central bank’s decision earlier this month to buy Treasury securities with the proceeds from its maturing mortgage bonds. That will keep the Fed’s balance sheet at $2.05 trillion, avoiding a shrinkage of its quantitative easing program.

After this week’s housing data, some economists are growing more worried about the possibility of a double-dip recession and deflation.

Existing home sales plunged 27 percent in July from June to at least an 11-year low. And new home sales dropped 12 percent in July to at least a 47-year low.

Economists now expect that second quarter GDP growth, originally estimated by the government at 2.4 percent, will be revised down to 1.5 percent Friday. That’s a far cry from the 3.7 percent expansion in the first quarter. (more)