(by Ameli Berksman)

U.S. fourth largest securities company Lehman Brothers reduced its forecasts for U.S. economic growth, inflation and interest rates as oil prices rose and job growth and consumer spending went down in June and July.

According to Lehman economists’ report, growth was anticipated to fall from 4.4 per cent to 4.3 per cent for the recent year. U.S. gross domestic product growth forecasts in 2005 fell to 3.3 per cent from 3.7 per cent.

``Surging oil prices have acted like a 1 percent or so `tax’ on GDP growth, and we have little confidence in forecasts of a sharp reversal in oil prices,’’ was said in the report. ``A negative dynamic has developed between the economy, the stock market and corporate confidence in the outlook,’’ it added.

The price of crude oil in New York was nearly $49 a barrel. It is connected with the fears of cutting oil supply in the light of recent clashes between U.S. troops and Shiite Muslim militiamen.

It is also anticipated by Lehman that consumer price index will lift 2 per cent next year, down from 2.5 per cent.
On August 12 the Standard & Poor’s 500 Index, Dow Jones Industrial Average and Nasdaq Composite Index dropped to the bottom for the recent year. Only 32.000 jobs appeared in the U.S. during July against a forecast of 240.000

Federal funds rate was up by a quarter percentage point to 1.5 per cent on August 10. Retail sales added 0.7 per cent in July against the 1.2 per cent forecast.