We’ve dodged a recession, economists say
The U.S. has likely dodged a recession for now, even though it’s too early to sound the all-clear for the economy, Bloomberg reported.
A string of stronger-than-projected statistics — capped by the news on Oct. 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 percent from about 2 percent. That’s nearly double the second quarter’s 1.3 percent rate and would be the fastest growth in a year, Bloomberg said.
“The U.S. 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 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 United States 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.”
In addition to a larger than expected increase in employment, government reports last week said manufacturing, vehicle sales and construction spending were showing more vigor.