â??I think that there is a quite good chance that we will have a recession late this year [or] next year.â??
Paul Krugman
Nobel laureate Paul
Krugman says he sees a good chance of a
recession hitting the
U.S. within a year.
Speaking at a government summit in Dubai, the
economist and highly read New York Times columnist said the likelihood of an economic slowdown hitting the
U.S. was high due to sluggish growth already buffeting China and Europe.
According to a CNBC,
Krugman said
that â??there was a good chance
that the
U.S. will have a
recession late this yearâ?* or by 2020.
Krugman said the fact
that policy makers, including the Federal Reserve and the European Central Bank, donâ??t have room to respond to a downturn also could be a factor
that worsens a downturn
that hits Europe and Asia and bleeds over into the
U.S.
In a separate interview with Bloomberg at the same summit in Dubai,
Krugman said he saw even odds of a recession.
â??There seems to be an accumulation of smaller problems and the underlying backdrop is
that we have no good policy response. [The] Fed canâ??t cut rates very much. Fiscal policy…there is in fact fiscal space, if we were prepared to use it, but itâ??s hard to see
that this current leadership is going to respond in any nimble way. So, yeah, Iâ??d say thereâ??s better than even odds
that we will have a recession,â?*
Krugman told Bloomberg on Sunday.
â??The euro area is clearly experiencing a slowdown pretty close to recessionary levels already and has no recourse. Draghi canâ??t cut rates because theyâ??re negative already …so I think Europe is a danger spot
that is potentially as big as China,â?* said the economist, referring to the ECBâ??s President Mario Draghi and
that central bankâ??s stimulus measures rolled out to address the 2007-â??09 financial crisis.
Read: Man who called Dow 20,000 says if â??we avoid a recession, weâ??re going to have a really goodâ?? stock market
To be sure, Krugman, who hasnâ??t been shy about forecasting economic recessions
that failed to materialize, acknowledges
that his track record (and everybody elseâ??s) in predicting slowdowns is far from infallible.
â??By the way, my track record for this is bad â?? as is everybodyâ??s. No one is good at calling these turning points,â?*
Krugman said, according to CNBC.
A looming
recession was chief among fears
that took hold of
U.S. markets late last year, culminating in Christmas Eve losses for the Dow Jones Industrial Average
DJIA, -0.25%
the S&P 500 index
SPX, +0.07%
آ* and the Nasdaq Composite Index
COMP, +0.14%
that were the
worst such declines on the trading session prior to Christmas on record.
However, those festering worries gave way to one of the best
January returns of the past three decades, as many market participants judged
that investors had been too pessimistic.
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