Most economists, when asked by the Wall Street Journal to assess the odds of a recession in the next year, have continued to place the odds at about one in five. “Not a prediction of imminent doom, but double the odds of a year ago,” as WSJ.com described it.
Gregory Daco, chief U.S. economist for Oxford Economics, said the omen of an economic downturn continues to loom because there is “a lot weighing on upcoming elections.”
“Nobody is ready to sound the all-clear with an election—especially this election—just two months away. Not only must forecasters assess the policies proposed by the candidates, they must keep in mind the potential for a divided Congress that could stymie either candidate. Business investment has been slumping this year, and a leading suspect is this election,” the Journal explained.
There is also an unusual tendency of recessions to happen in close proximity to presidential elections, the Journal reported.
"Kevin Hassett and Joseph Sullivan recently documented that the U.S. enters recessions about twice as frequently in the year after a presidential election compared with all other years. Five of the last 11 recessions landed in that window. The National Bureau of Economic Research has estimated recession dates back to 1854. In that period, 41% of recessions have fallen in the time window that only comprises 25% of months (the year after an election, of course, comes every fourth year)," the Journal reported.
The U.S. economy last entered a recession — defined as two consecutive quarters of year-on-year economic contraction — in December 2007, after the housing bubble burst, leading to a global financial crisis. That recession, dubbed the Great Recession, ended in mid-2009, making it the longest U.S. recession since the end of World War II, CNBC reported.
To be sure, Charles Biderman, CEO of TrimTabs Asset Management, warns that the U.S. and world economies are on the path to economic chaos.
“We’re in a manufacturing recession,” he explained to CNBC. And because of Brexit, “the world is entering into a global recession.”
He explained that a unique combination of economic and financial factors may possibly doom the U.S.
"The fuel for the rising market, which is stock buybacks, is declining. June was the least amount of stock buybacks in many a month. For the first half of this year, we have seen a one-third decline in announced buybacks," he said. "That is the only fuel for us taking stock higher — companies giving money to shareholders by reducing the share count," he said.
"We’re also seeing a dramatic decline in growth in the U.S. economy’s incomes," he said. "Everybody talks about spending and GDP, but it’s incomes that count," he said.
He said individuals are showing a 2 percent gain in income and that’s not enough to take the economy higher.
(Newsmax wire services contributed to this report).
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