The United States could easily experience a double-dip recession from repercussions in Europe and China, said Christopher Wood, equity strategist for CLSA Ltd. in Hong Kong.
America’s banks are still limiting their lending, resulting in less GDP growth for 2011, Wood says.
With Europe’s continuing debt crisis and China’s weak real estate market, the global economy faces a weak future.
“A trade row between China and the U.S. on top of the growing concerns about a ‘double dip’ in the West is the last thing markets will want to contend with. But they may have to,” Wood wrote in the Wall Street Journal.
The stock market had already reacted to the lack of bank lending, he said.
“It's this prospect that's begun to be discounted in the recent stock-market correction, which has already seen the S&P 500 give up all its gains for the year," Wood said.
"This will sooner or later pave the way for another round of fiscal easing in Washington when both the Obama administration and Congress give up on their current hopes of a normal U.S. recovery,” Wood said.
While the renminbi has fared well during the latest crisis, the disparity between that currency and others in the West may have Chinese leaders rethinking their future strategy, he said.
“That political mood swing will again raise the protectionist risk in Washington, with the lightning rod being the Chinese exchange rate. Beijing has been signaling that it will resume incremental appreciation of the renminbi by the middle of this year," Wood said.
"But with the renminbi having appreciated by 24 percent against the euro since late November, China's leaders may be having second thoughts,” Wood said.
Other economists believe the numbers lead to a recovery in the United States, the Journal reports.
“Although risks involving Europe have recently escalated, the outlook in this country has improved in most respects,” said National Association for Business Economics President Lynn Reaser, chief economist at Point Loma Nazarene University.
"Growth prospects are stronger, unemployment and inflation are lower, and worries relating to consumer retrenchment and domestic financial headwinds have diminished."
© 2017 Newsmax Finance. All rights reserved.