Mark Zandi, Moody’s Chief Economist warns that the possibility of a recession transpiring in the next 12 to 18 months is uncomfortably high. He opines that the reality of a recession will happen if things do not turn out as planned.
According to the Moody analyst, a recession can be avoided if president Donald Trump does not escalate the tariff war with China, and if the UK arrives at a favorable solution to Brexit. Mr. Zandi also factors in the ability of central banks to maintain monetary stimulus. Still, he foresees that even if a recession does not occur, he predicts that the global economy will be much weaker, since he doubts if policymakers will be able to alter the current trend.
Although other economists do not agree with Mr. Zandi’s prediction about a forthcoming recession, they acknowledge the likely possibility of having a devitalized economy.
According to Professor Eswar Prasad of Cornell University, relying on consumer spending alone is not a sustainable condition. It has helped support growth in various economies but also faltered in other sectors. The professor stated that the key to economic growth is a set of policies aimed at reviving business and consumer confidence in order to boost investments.
Current Trend of Economic Activities in the U.S.
A recent poll conducted by Bankrate.com revealed that in the United States, most Americans have not actually recovered from the blows dealt by the 2008-2009 Great Recession. The latter event left many American households with fewer reasons to celebrate. Bankrate.com’s Sr. Economic Analyst, Mark Hamrick, said they found out that tens of millions of Americans are still struggling to even go back to their previous condition before the economy went south and took a turn for the worse.
Their latest survey showed that more than half of the American adults who went through the Great Recession said they experienced some kind of adverse financial impact. To which half of them said that they are even doing worse now, compared to how they were before the financial crisis of the previous decade took place
Such findings can be supported by the American Association of Retired Persons (AARP) data that shows more than half of American households today are without emergency savings.
Correspondingly, the U.S. Commerce Department came out with a report indicating that consumer retail spending fell for the first time since February of this year. Although August retail-spends went up by 0.6%, September saw a 0.3% drop; providing a clear sign that at present, the U.S. is experiencing slow economic growth.
Affected by the 0.3% slash in household spending are the online retailers, sellers of building materials and automobile dealers. According to the report, the decline in retail spending became apparent in February.