Tags: us | japan | deflation

S&P: U.S. Could Face 20 Years of Hard Times

By Dan Weil   |   Friday, 27 Aug 2010 10:09 AM

Japan’s economy has sucked wind for the better part of two decades, and the United States may soon follow suit, says David Wyss, chief economist at Standard & Poor’s.

“I think there is still a realistic possibility in the U.S. that it’s slipping into this pattern like Japan has — 10, 20 years of stagnation,” he said at a Tokyo seminar covered by Bloomberg.

“A rising population in the U.S. creates more need for capital, more need for housing, which makes deflation a little less likely, but I’m not sure if that makes it impossible.”

The U.S. economy grew 2.4 percent in the second quarter, according to the government’s preliminary estimate. That’s a far cry from the first quarter’s 3.7 percent rate.

And economists expect a downward revision to the second quarter figure, thanks to a $50 billion trade deficit in June.

“A slow recovery is a vulnerable recovery," Wyss said. "It’s fragile. Any kind of outside shock could easily still turn this into another recession.”

Meanwhile, news that existing home sales fell 27 percent in July has turned economists even more bearish toward the future.

Growth may fall below 1 percent for the second half of the year, says independent economist Joel Naroff.

“It won’t be a double-dip recession, but it might feel like it,” he told The New York Times.

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Japan s economy has sucked wind for the better part of two decades, and the United States may soon follow suit, says David Wyss, chief economist at Standard Poor s. I think there is still a realistic possibility in the U.S. that it s slipping into this pattern like...
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2010-09-27
 

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