Tags: imf | us | recession | cliff

IMF’s Lagarde: US to Plunge Into Recession If It Falls Off Fiscal Cliff

By    |   Tuesday, 02 Oct 2012 07:47 AM

The U.S. economy could enter a recession next year if Congress doesn’t avert the so-called fiscal cliff of automatic spending cuts and tax increases, International Monetary Fund Managing Director Christine Lagarde said.

“That would entail a growth contraction of about 2 percent,” Lagarde told “CBS Evening News with Scott Pelley.”

Given that the U.S. growth forecast for next year is about 2 percent, “you are pretty much at the recession stage,” she said.

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

The IMF is expected to announce it is lowering its forecast for world growth to 3 percent this year.

She did see some rays of hope for the more than 12 million Americans who lost their jobs in the recession.

"I would say there is good news lurking out there. In particular the fact that the housing market is picking up is in our view a clear sign the situation is improving," she said.

"When you see that the financial institutions have been clearly strengthened, restructured and made a little bit safer and that the housing market is picking up, that's not bad," she added.

But other experts see a similar gloomy fate for the struggling U.S. economy.

New economic data combined with President Barack Obama's "stay-the-course" approach point to recession in 2013, says David Malpass, president of Encima Global and former deputy assistant Treasury Secretary during the Reagan administration.

"This administration's economic policy is built on deficit spending, government control over the economy and dependence on the Federal Reserve to buy the government's excess debt," Malpass wrote in The Wall Street Journal.

"These policies aren't working,” says Malpass. “They discourage private investment and jobs, and the policies have resulted in high unemployment, weak business confidence and rapidly declining median incomes."

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

 

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The U.S. economy could enter a recession next year if Congress doesn t avert the so-called fiscal cliff of automatic spending cuts and tax increases, International Monetary Fund Managing Director Christine Lagarde said.
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Tuesday, 02 Oct 2012 07:47 AM
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