Forecasts hint that US may dodge recession
A string of stronger-than-projected statistics has prompted economists at Goldman Sachs Group Inc. to raise their growth forecasts to 2.5% from about 2%.
By Bloomberg | Updated:
WASHINGTON: The US has likely dodged a recession for now, even though it’s too early to sound the all- clear for the economy.
A string of stronger-than-projected statistics -- capped by the news on October 7 of a 103,000 rise in payrolls last month --has prompted economists at Goldman Sachs Group Inc. and Macroeconomic Advisers LLC to raise their growth forecasts for third quarter growth to 2.5% from about 2%.
That’s nearly double the second quarter’s 1.3% rate and would be the fastest growth in a year. “The US economy doesn’t look like it’s double-dipping at all,” said Allen Sinai, president of Decision Economics Inc. in New York.
“But it is a crummy recovery.” That recovery still faces what economist Chris Rupkey in New York calls “a lot of headwinds.” These range from the sovereign-debt crisis in the euro zone—and increasing likelihood of a recession there-—to political gridlock in the US over the budget.
“We can skirt a recession,” said Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. “But if headlines worsen in Europe and cause a major stock-market rout, it could lead to a loss of confidence here on the part of businesses and consumers and make forecasts for a recession a reality.”
European stocks and the euro rose after German and French leaders pledged to devise a plan to stem the debt crisis in three weeks. US stock futures also gained. The unsettled outlook may push US Treasury bond yields back down as investors seek safety in the debt of the world’s largest economy.
A string of stronger-than-projected statistics -- capped by the news on October 7 of a 103,000 rise in payrolls last month --has prompted economists at Goldman Sachs Group Inc. and Macroeconomic Advisers LLC to raise their growth forecasts for third quarter growth to 2.5% from about 2%.
That’s nearly double the second quarter’s 1.3% rate and would be the fastest growth in a year. “The US economy doesn’t look like it’s double-dipping at all,” said Allen Sinai, president of Decision Economics Inc. in New York.
“But it is a crummy recovery.” That recovery still faces what economist Chris Rupkey in New York calls “a lot of headwinds.” These range from the sovereign-debt crisis in the euro zone—and increasing likelihood of a recession there-—to political gridlock in the US over the budget.
“We can skirt a recession,” said Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. “But if headlines worsen in Europe and cause a major stock-market rout, it could lead to a loss of confidence here on the part of businesses and consumers and make forecasts for a recession a reality.”
European stocks and the euro rose after German and French leaders pledged to devise a plan to stem the debt crisis in three weeks. US stock futures also gained. The unsettled outlook may push US Treasury bond yields back down as investors seek safety in the debt of the world’s largest economy.
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