Economists Predict A US Recession in the Next 12 Months
Economists have lowered their growth projections for the third quarter from 3 percent in the middle of the year down to 2 percent as the year comes to a close. The lower projections may be attributed to China’s economic slowdown and the domino effect this could have on other economies.
Federal officials are also concerned about China, with the officials considering the slowdown a risk to inflation and economic growth in the US. The risk is so significant that the Fed has delayed raising interest rates in what would have been the first hike since 2006.
According to minutes released by Fed officials, “In spite of the data released showing that economic conditions in the US were at par with market expectations, the micro-financial conditions were a bit worrying as global economic growth prospects dampened and financial market volatility increased.
In an interview with Bloomberg, David Rubenstein of the Carlyle Group pointed out to the increased likelihood of a recession in the next one, two or three years. An earlier poll had indicated that overall sentiment among economists was that the US would enter a recession in 2018 or 2019.
In 2015, the slowdown in global economic growth has been a major preoccupation among investor, causing the MSCI World Index and S&P 500 to plunge down about 4 percent.
The global economy, which is worth $73.5 trillion, is set to grow by 3.1 percent in 2015 and 3.6 percent the following year, according to forecasts by the International Monetary Fund. However, Willem Buiter, an economist at City Bank says that these figures are going lower and may need to be revised in anticipation for a global recession as early as 2016.