You know that line… “Opinions are like a$$holes, everybody has one!” That’s about the sentiment for a U.S. recession next year. The “will we or won’t we” debate is reaching a peak… except of course for those who have already decided (Bill Gross of Pimco) that the U.S. is in a recession right now. That’s not too far out for a call on the economy, because recessions can be very hard to figure out until the economy is already coming out the other side of the business cycle. Often, the real beginning of a recession is only determined years after the fact. So maybe Mr. Gross is right. A lot of other folks have entered the debate on both sides:
- NO: Abby Joseph Cohen from Goldman Sachs says a recession in 2008 is not likely.
- YES and NO: A December Reuters/Zogby poll says 43% of likely U.S. voters expect a recession in 2008.
- MAYBE: Alan Greenspan recently modified his view of a recession from less than 50% to right at 50%.
- NO: Diana Furchtgott-Roth, former Chief Economist at the U.S. Department of Labor thinks a recession not likely.
- YES:ABN AMRO Bank believes the U.S. is entering a “viscious spiral” with a 75% chance of “plunging into a recession.”
- MAYBE: State Street Bank is not on the record, but believes it “remarkable” if the U.S. avoids a recession in 2008.
- HELL YES!: Jim Rogers isn’t satisfied just to say the U.S. is in a recession… he even thinks the Administration is lying!
Who knows… will we enter a recession? If we do, I think it has a lot to do with psychology and the media. All this talk and blather… of which I too am contributing, ultimately influences the perceptions of a lot people. Personally, I’m not convinced… I think the economy will manage to trudge along while contining to slow, but that a combination of productivity, consumer spending and global trade influences will keep us going. If something extrinsic to the U.S. economy happens- such as an economic crash in Asia, then all bets are off. But with the Presidential election taking shape in full force in 2008, the economic noise will get a lot louder for a while. Heck, I’ll bet all the political wrangling may even contribute something to overall GDP!
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