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Krugman: United States Faces Nasty Recession

By Gene Koprowski   |   Thursday, 23 Oct 2008 11:51 AM

Economist Paul Krugman is predicting that the United States now faces a "nasty recession" with a "lot of suffering" to come.

"That's baked in," said Krugman, a Princeton University professor and New York Times columnist. "There is a lot of downward momentum."

The recent winner of the Nobel Prize for economics said a rise in the unemployment rate to 7 percent "seems almost certain," and he has the odds of an increase in unemployment to 8 percent at "better than even."

Krugman, an ardent critic of the administration of President George W. Bush and its domestic and foreign policies, and a supporter of Sen. Barack Obama for president, won the 2008 Nobel Prize in Economics for his analysis of trade patterns and location of economic activity.

"We're going to have a recession and perhaps a prolonged one but perhaps not a collapse," said Krugman.

"I feel vindicated by the fact that when I was criticizing Bush, 80 percent of the public approved of him, and now it's more like 80 percent of the public disapproves. That's the vindication," said Krugman.

Krugman argued that the crisis signals a cultural shift away from the belief in the primacy of markets, as espoused by the Bush administration.

"The people who assured us that markets work, that the private pursuit of profit always leads to a good result have been rather massively wrong," he said.

In a note to business journalists, Mark Lund, chief investment officer at Stonecreek Wealth Advisors, said there may not be a recession next year.

"2009 will be an interesting year, but we will most likely see a recovery in the markets over the next three to six months due to the bailout plan taking effect," said Lund.

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Economist Paul Krugman is predicting that the United States now faces a "nasty recession" with a "lot of suffering" to come."That's baked in," said Krugman, a Princeton University professor and New York Times columnist. "There is a lot of downward momentum." The recent...
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