Tags: Moody | Chance | US | Recession

Moody's: Chance of US Recession Stands at 40 Percent

Wednesday, 12 Oct 2011 08:23 AM

There is a 40 percent chance the United States will stumble back into the depths of a recession in the next six months, according to Moody's Analytics.

The economy is growing, although the European debt crisis and future political fistfights over budget deficits in the United States could send the economy right back into contraction.

"Policymakers on both sides of the Atlantic must intervene," says Moody's Analytics Chief Economist Mark Zandi, according to the Wall Street Journal.
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"In our baseline outlook, the U.S. will avoid recession only because we expect policymakers to act in the next few months."

The forecast for a 40 percent chance of recession remains unchanged from a similar prediction made earlier this year.

Moody's Analytics is the risk-management unit of Moody's Corp., which also runs the ratings agency of the same name.

Focusing on Europe, Moody's Analytics recognizes actions made by the European Central Bank to help banks with their liquidity issues although such policies don't recognize a lack of capital.

That means, the firm says, Europe needs to expand the European Financial Stability Fund to make sure it can protect the continent's financial system should Greece default and drag the continent deeper into crisis.

Other leading economists say the U.S. and Europe cannot avoid a recession and the debate now centers about how bad it will be, and not whether or not it's going to happen.

"The question is not whether or if there is going to be a double dip, but whether it's going to be mild or severe with another financial crisis," New York University economist Nouriel Roubini tells CNBC.

"The answer on that depends on the eurozone."

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There is a 40 percent chance the United States will stumble back into the depths of a recession in the next six months, according to Moody's Analytics. The economy is growing, although the European debt crisis and future political fistfights over budget deficits in the...
Moody,Chance,US,Recession
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2011-23-12
Wednesday, 12 Oct 2011 08:23 AM
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