Tags: Moody | Zandi | us | Odds | Recession

Moody’s Zandi: Odds Are Even US to Dip Back Into Recession

Tuesday, 27 Sep 2011 02:50 PM

The chances the United States will fall back into recession within a year are even, says Mark Zandi, chief economist at Moody's Analytics.

"Given what happened in the stock market last week, given what's going on in Europe, I'd put the odds of recession in the next six, nine months at almost even," Zandi recently told CBS.

Political impasses are to blame.

"I think the political vitriol, the spectacle that occurred here in Washington this spring and summer did tremendous damage," Zandi says, referring to the debt-ceiling impasse that almost threw the country into default.

"I think the economy at the beginning of the year had a lot of potential. We are creating a couple hundred thousand jobs per month. Unemployment was coming down. Then we went through this mess. It just eviscerated confidence. People were already nervous because of what we've all been through."

Political leaders have to cease headline-grabbing fights over every spending and other issue that arises.

Otherwise, businesses will remain worried, and when they're worried, they won't hire.

"If businesses started laying off workers, that would be recession. But they certainly have frozen. And it's because of the political environment," Zandi says.

Others agree the chances of a U.S. double dip are growing, including Robert Zoellick, head of the World Bank, who has previously such a downturn was unlikely.

"We’re getting closer to the risks of double dip," Zoellick tells Bloomberg.

"I still wouldn’t predict it, but it really depends on how the risks coming out of Europe are managed."

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The chances the United States will fall back into recession within a year are even, says Mark Zandi, chief economist at Moody's Analytics. Given what happened in the stock market last week, given what's going on in Europe, I'd put the odds of recession in the next six,...
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