In a Recession or Headed Toward One?
April 09, 2008

Is the U.S. headed for a recession or already in one?

The man on the street likely would say we're in one, but experts are debating it.

Former Federal Reserve Chairman Alan Greenspan said Tuesday the U.S. was in recession. On Wednesday, the International Monetary Fund's issued its latest World Economic Outlook that said the U.S. will slip into a recession that will spread globally.

The IMF report predicted the U.S. economy will slip into a "mild recession" this year and drag the global economy down with it. The IMF's latest World Economic Outlook sees a 25 percent chance that world economic growth could fall below 3 percent this year and next – the “equivalent of a global recession,” the Wall Street Journal reported.

The IMF called the financial turmoil caused by the U.S. subprime mortgage crisis “the largest shock since the Great Depression.”

The fund cut the baseline forecast for global growth in 2008 to 3.7% from the last estimate of 4.2% in January. The world economy is expected to expand 3.8% next year. The IMF slashed its U.S. growth forecast by a full percentage point from January to a 0.5% pace this year, and sees it edging up to a 0.6% rate next year.

The report said risks remain to the downside in the short term, even though emerging economies are expected to continue to experience robust growth through 2009.

Meantime, Greenspan said in a Tuesday interview with CNBC the U.S. economy was already in recession. He did not predict how deep or how long it would last.

“Consumers are beginning to shrink in, the automobile markets are beginning to contract, production is beginning to ease, and we are in the throes of recession,” he told CNBC.

Posted by at 7:52 AM under Business , News , Personalities | Comments (0) | digg this | Seed Newsvine