50-50 Chance of Depression

From Bloomberg:

U.S. Has 50% Chance of Depression, Economist Roger Farmer Says 

depression-car-saleThe U.S. economy has a 50 percent chance of falling into a depression during the next three years, said Roger Farmer, a member of the National Bureau of Economic Research’s economic fluctuations and growth program.

“There’s a significant probability things will get worse,” Farmer, 53, said during a phone interview today. “We’re certainly not at the end of the recession and things are getting worse.”

A drop in the Conference Board’s index of leading indicators, released yesterday, underscores economists’ expectations that the recession will be the longest in the postwar era as banks restrict credit, home and stock values plunge, and job losses mount. Farmer said he is predicting the U.S. recession will last at least another year.

“Everything depends on business confidence, and what I see is declining confidence,” said Farmer, who is also graduate vice-chair of the economics department of the University of California at Los Angeles.

The loss of confidence is leading households and companies to undervalue assets, which in turn is hurting consumer spending and investment, he said. [more]

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One Response

  1. I wish I could say I found that to be a shocking prediction.

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