TIMESONLINE: In the United States, the “R” word is back. As people in the world’s biggest economy pick at Thanksgiving leftovers, the ghost looming over the remains of the feast is the spectre of recession.
With Christmas not far off, Americans are feeling anything but festive. Consumer confidence is at its lowest for a decade and a half, apart from in the immediate wake of Hurricane Katrina in 2005. Polls show that two fifths of US households expect a recession in the next year – up from fewer than a third only a month ago. Glowering at their home computers, the anxious spend ever more time typing the “R” word into search engines.
Yet a slide into recession is far from the main expectation of Wall Street’s forecasters. Certainly, most expect a nasty economic setback in the closing months of this year, and several quarters of sub-par growth. But the consensus is for the US economy to expand by a relatively healthy 2.2 per cent next year.
Who, then, is right? Could the churning guts of angst-gripped Americans on Main Street end up more accurate than the insights that wizards on Wall Street glean from their data-laden statistical models? Alas, the answer is yes. Few analysts saw the last two recessions before they hit and, sadly, the sages look more and more likely to emerge as being too sanguine. A US recession looks more probable than not. >> By Gary Duncan
Mark Alexander
