Economists see probability of US recession

Wednesday, 17 August 2011 00:00 - - {{hitsCtrl.values.hits}}

Washington, Aug 16 (IANS/EFE) Economists see a 30 percent chance that the US will suffer another recession, a significant increase from their view three months ago, according to a survey released Monday by USA Today.

Results of the newspaper’s latest quarterly survey of 39 prominent economists, carried out Aug 3-11, showed that they felt that the chance of a new recession in the US had doubled in the last three months.

Given that forecast, another economic blow, such as further downward moves in the stock markets or the worsening of the European debt crisis, could push the US economy ‘over the edge’.

Even if the US manages to avert another recession, economists say that economic growth will remain about 2.5 percent next year. In the April survey, they had forecast economic growth of 3.1 percent. The US needs economic growth of above 3 percent to be able to substantially reduce the unemployment rate, which currently stands at 9.1 percent.

In the face of that projected weak growth, the 39 economists surveyed also said that the unemployment rate will slowly decline to 8.8 percent next year.

Just a few weeks ago, experts had predicted that the economy would strongly rebound in the second half of the year, basing that outlook on data such as the fall in fuel prices, which - in their judgment - would encourage consumption in other areas, and an increase in automobile sales.

According to the daily, the economists’ pessimism reflects in part the concern over the debt crisis in Europe, a calculation of economic growth of less than 1 percent for the first half of 2011 and the recent downgrade of the US sovereign debt rating by Standard & Poor’s.