The government announced Friday that the economy grew at an annualized rate of only 1.9 percent in the first quarter. And the news is going to get worse, says star independent economist Gary Shilling.
“I’m predicting another recession next year,” he told MarketWatch. It’s not a double-dip recession, because 3 ½ years already have passed since the last recession began in December 2007 (it ended in June 2009), he says.
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In the past, severe recessions – this was the worst since the 1930s – were followed by sharp rebounds. But this time around the recovery has been “distinctly subpar,” Shilling says.
“As of the first quarter, real GDP is barely above its peak in the fourth quarter of 2007, whereas earlier recoveries were well above their previous tops 13 quarters later,” he writes in a recent edition of his newsletter, Insight.
The housing sector is particularly weak, Shilling says. He predicts another 20 percent plunge for home prices by 2013, when we finally hit bottom.
That would put home prices 45 percent below their early 2006 highs, a forecast dovetailing with that of star Yale economist Robert Shiller.
Others aren’t quite as bearish on the economy as Shilling.
“We’re going to see improvement in the second half of the year, but I would not expect it to be stellar,” Scott Brown, chief economist at Raymond James, told Bloomberg. “We still have a bunch of headwinds for growth.”
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