MORE JOYOUS ECONOMIC NEWS – AT 10:51 A.M. ET:  The International Monetary Fund brings us greetings, the kind of greetings we'd prefer not to hear:

WASHINGTON (AP) -- The world economy has entered a "dangerous new phase," according to the chief economist of the International Monetary Fund. As a result, the international lending organization has sharply downgraded its economic outlook for the United States and Europe through the end of next year.

The IMF expects the U.S. economy to grow just 1.5 percent this year and 1.8 percent in 2012. That's down from its June forecast of 2.5 percent in 2011 and 2.7 percent next year.

To achieve even that still-low level of growth, the U.S. economy would need to expand at a much faster rate in the second half of the year than its 0.7 percent annual pace in the first six months.

Most economists expect growth of between 1.5 percent and 2 percent in the final two quarters. Though an improvement, it wouldn't be enough to lower the unemployment rate. The rate has been 9 percent or higher in all but two months since the recession officially ended more than two years ago.

"The global economy has entered a dangerous new phase," said Olivier Blanchard, the IMF's chief economist. "The recovery has weakened considerably. Strong policies are needed to improve the outlook and reduce the risks."

The IMF has also lowered its outlook for the 17 countries that use the euro. It predicts 1.6 percent growth this year and 1.1 percent next year, down from its June projections of 2 percent and 1.7 percent, respectively.

COMMENT:  What the Fund does not cover is that this kind of economic stress can eventually lead to social and political unrest.  We have seen hints of that in Europe, where riots have broken out in Greece and Spain.  And economic stress can also lead to unwise decisions that can have catastrophic effects a decade or two down the line – decisions involving risky cuts in defense budgets, for example.

It is a time for strong, informed leadership.  We don't have that, and we must depend on an upcoming election to correct the problem.

September 20, 2011