Tags: Economy | recession | Global Macro Investor | Raoul Pal

Global Macro Investor's Raoul Pal: 65 Percent Chance of US Plunging Into Recession

Global Macro Investor's Raoul Pal: 65 Percent Chance of US Plunging Into Recession
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By    |   Sunday, 06 December 2015 05:59 AM


The United States stands a 65 percent chance of plunging into an economic recession, according to one prominent market observer and analysis of dismal recent manufacturing data.

"The economic situation is deteriorating fast,” Raoul Pal, the publisher of The Global Macro Investor, recently told CNBC.

“And meanwhile the Fed seems to want to raise interest rates into that, which I think is a bit of a policy mistake and I think the market is getting more and more concerned from not understanding why they're doing it," Pal told CNBC's "Fast Money."

The Institute for Supply Management recently said its manufacturing index fell below 50 last month, indicating a contraction in the industrial sector. The survey's participants cited low growth in Europe and China as impacting business, as well as a drag from the strong dollar, CNBC reported.

The report "is showing that the U.S. economy is almost at stall speed now," Pal said. "It gives us a 65 percent chance of a recession in the U.S. I think much of the world is already in recession. Europe's not there yet, but it will come in due course," he said.

"That [65 percent] number comes from using the ISM survey, and every time it has crossed 50 since 1948 gives you a 65 percent chance of a recession," Pal said.

“Pal said history suggests a low ISM often portends downturns in the U.S. economy. Although manufacturing is a relatively limited slice of the U.S. economy, economists still believe the sector is a barometer of growth,” CNBC explained.

"The ISM correlates perfectly with U.S. GDP. Even though manufacturing is a smaller share of the economy, it is still a perfect predictor of GDP," he said.

Meanwhile, Goldman Sachs analysts have seen the future, at least into next year, and it's not pretty. In fact, the predictions are so dismal, Fortune described them as "incredibly depressing."

Elsewhere, Barron's reports that Apple, CVS Health, and General Motors are among the best investment bets for the year ahead.

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The United States stands a 65 percent chance of plunging into an economic recession, according to one prominent market observer and analysis of dismal recent manufacturing data.
Economy, recession, Global Macro Investor, Raoul Pal
333
2015-59-06
Sunday, 06 December 2015 05:59 AM
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