Tags: Nariman Behravesh | chief economist | recession | risks | next year

Economist: Many Risks Threaten Fragile Recovery

Tuesday, 29 Dec 2009 03:05 PM

The U.S. economy may not rebound quickly next year, said Nariman Behravesh, chief economist at Global Insight, the economic forecasting and consulting firm.

“The recovery will be slow and things will be fairly fragile,” he said, Yahoo! Tech Ticker reported.

The possibility of a double dip recession is not far fetched, he said.

"Any number of risks could knock us back down into recession," Behravesh said.

The risks are a major decrease in consumer spending, failed monetary policy by the Fed or another major financial crisis, he said.

While another recession is not likely to occur, Behravesh said a 20% possibility is “too high.”

He also predicts the likelihood for a rebound in the economy.

“There's a lot of pent up demand for consumer spending for cars, for housing. And that could be released a lot sooner and lot more powerfully than anyone is talking about,” Behravesh said.

Behravesh said the United States is most likely to experience a lethargic recovery with high jobless rates.

While consumer sentiment is down, corporate balance sheets are looking resilient, the Wall Street Journal reported.

“Unlike the household sector, the corporate sector is in excellent fiscal condition,” said Robert Barbera, chief economist at Investment Technology Group, a brokerage and financial technology firm.

A good recovery depends on a rebound in housing.

However, home foreclosures continue to surge, bringing another large amount of houses onto the market and slashing prices even more.

“There still is a huge, huge excess of homes," said Jim O'Sullivan, chief economist at MF Global.

Lower mortgage rates will help lower the extra number of homes, but not for long, he said.

“You're going to eat into that glut over time, but nonetheless there's still a huge excess,” O'Sullivan said.

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The U.S. economy may not rebound quickly next year, said Nariman Behravesh, chief economist at Global Insight, the economic forecasting and consulting firm. The recovery will be slow and things will be fairly fragile, he said, Yahoo! Tech Ticker reported. The...
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2009-05-29
Tuesday, 29 Dec 2009 03:05 PM
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