The U.S. economy seems to the growing at the slowest pace since the US President took office, which has raised fears from different quarters. However, economists have clearly stated that the economy is not in any way heading for a recession as feared by some.
The recent GDP report from China that showed the slowest annual growth rate in nearly three decades has raised the fears of a possible recession, with the likes of Ray Dalio, the founder of Bridgewater warning of a recession.
The U.S. economy, meanwhile, seems to have slowed, though economists do not have as much data as usual because of the government shutdown. Housing data for December revealed a significant reduction in home sales to a three-year low while consumer sentiment fell to 90.7, its lowest level since October 2016.
“It just shows how fragile things are. If we don’t have recession this year, the odds are high that we’ll have one in the next few years,” said Mark Zandi, chief economist at Moody’s Analytics. “I think we’ll navigate through. As the economy weakens, political pressures will intensify and the policy makers will respond sufficiently to keep the train on the tracks.”
Ray Dalio said at Davos that he expects a recession in 2020. He also expressed his concern about “greater political and social antagonism” around the globe. Dalio’s fears might be substantiated with the fact that the IMF this week said it cut its global growth forecast for 2019 to 3.5 percent from 3.7 percent, withe the trade war between the U.S. and China being a major factor.
“It’s a confluence of things. One is the end of the stimulus in the U.S. That takes a lot of steam out. That affects the entire global economy,” said Mark Zandi, chief economist of Moody’s Analytics. “Part of it is the trade war. That’s doing damage all over the world including the U.S. and that’s accumulating over time. Then you have the government shutdown, which is very corrosive on the economy and it’s starting to take the steam out.”
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