The economic data in the U.S. and abroad this week has not been encouraging, leading to serious concerns over another recession.
Here's some highlights:
- The International Monetary Fund lowered its forecast for U.S. growth this year and in 2012, to 1.5% down from 2.5%.
- September Manufacturing PMI (purchasing managers index) out of the Eurozone and China were lower than expected and indicating contraction in the respective areas.
- U.S. housing starts fell 5%
- The WTO cut 2011 world trade growth forecast to 5.8% from 6.5%
All the negative news is taking down stocks, adding another layer of negativity to the mix. Add it all together and NYU Professor Nouriel Roubini, a.k.a. Dr. Doom, says "we are entering a recession." The only question is: How deep?
In the accompanying clip the Daily Ticker's Aaron Task discusses the outlook for the economy with Michael Spence a Nobel Laureate and professor at the NYU Stern School of Business.
"You can easily make an argument that the short run and medium run doesn't look very good," says Spence. However, unlike his colleague Roubini, Spence says a recession is not a sure thing. "I'd probably be slightly more optimistic."
Instead, Spence sees the U.S. muddling through a "very difficult, slow growth path to sustainable recovery." The wild card, of course, is Europe. "If Europe goes down then that will take us down," he admits.
Spence has confidence - at least more confidence than Aaron - that European policymakers will get their collective acts together and stem the growing sovereign debt crisis. He believes it's not that Europe's leaders don't understand the seriousness of the issue, it's simply very difficult to get so many parties to agree on the proper course of action. In that regard, it's not unlike the current political landscape in Washington, only worse.
- International Monetary Fund
- Michael Spence