Tags: Achuthan ‘Double-Dip’ Risk Gone | Soft Landing Ahead

Achuthan: US Headed for Soft Landing, not Double Dip

Friday, 29 Oct 2010 01:09 PM

Economist Lakshman Achuthan told CNBC that the U.S. economy has avoided any threat of reverting back into recession even though growth won't be robust.

Achuthan, managing director of the Economic Cycle Research Institute, said the economy might move into a "soft landing" phase but wouldn’t see a “double-dip” recession, commonly defined as when a nation's economic output goes into decline, stages a modest recovery, and then falls back into a recession again.

"Being very definitive on this, we're not going to go into a new recession anytime soon," he told CNBC. "That has a lot of implications when you can rule out a certain nightmare scenario," he said.

"What we're looking at is the collective pattern in the wake of recessions," Achuthan said.

"You have a little bit of a spurt into recovery, then it throttles back and at that point you come to a fork in the road, and you either go into a new recession ... or you veer away into the soft landing track. We've done the latter."

Achuthan said a number of leading economic indicators he monitors point to the economy avoiding a second downturn. He also thinks the Federal Reserve is behind the curve in not anticipating an economic rebound.

However, other economists warn that the U.S. is headed for a dreaded double dip.

Yale economist Robert Shiller says the U.S. economy is in trouble, and there’s little the Fed Reserve can do about it.

Economic growth slowed in both the first and second quarters, he notes in an interview with Yahoo’s Tech Ticker. “That’s not a very strong indicator, but it does suggest a recession may be coming soon,” Shiller explains. “Things are looking weaker now.”

As for the Fed, it already has pushed short-term interest rates to zero. “So they can’t do anything more about it,” Shiller says.

“They’re pushing on a string. It’s just not enough. If people don’t want to spend, if they aren’t confident about the future, even if you offer them a zero borrowing rate, they don’t want it.”

That situation amounts to a “liquidity trap,” a phrase legendary economist John Maynard Keynes coined to describe the Great Depression.

© 2017 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
Economist Lakshman Achuthan told CNBC that the U.S. economy has avoided any threat of reverting back into recession even though growth won't be robust. Achuthan, managing director of the Economic Cycle Research Institute, said the economy might move into a soft landing ...
Achuthan ‘Double-Dip’ Risk Gone,Soft Landing Ahead
360
2010-09-29
Friday, 29 Oct 2010 01:09 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved