Economists believe US already in recession

Analysis

The US economy has already fallen into a recession, according to a majority of economists surveyed by The Wall Street Journal and published on Thursday.

“The evidence is now beyond a reasonable doubt,” said Scott Anderson of the bank Wells Fargo. Anderson was among the 71% of 55 economists asked to assess the state of the economy who agreed it is already in recession. The survey conducted from March 7 to March 11 demonstrated a shift in the views of economists from a survey that took place five weeks ago. The economists now believe the economy will only add an average of 9,000 jobs monthly over the next 12 months, down from 48,500 in a previous survey. Twenty economists said they expect pay rolls to shrink.

US President George W Bush has rejected suggestions the economy was in recession but acknowledged there was an economic slowdown. He signed legislation in February that will provide Americans with a tax refund of several hundred dollars aimed at stimulating spending and offsetting the slow growth forecasts. “You can try to put labels on what the economy is. I mean, it’s very low-growth and it’s much ... slower than we would certainly like to see,” a White House spokesman, Tony Fratto, said Thursday. “What we’re focused on is the policies that will return us to higher growth.” The Commerce Department on Thursday added to the economic woes by announcing that retail sales fell by 0.6% in February, reflecting a sharp fall in consumer spending, which is the main force behind economic growth.

High energy costs and the crisis in the housing market are believed to be the main culprits behind the slumping economy. The US government reported on March 7 that 63,000 jobs were lost in February. “My recession call comes from the employment data,” Stephen Stanley of RBS Greenwich Capital said. Twenty-nine of the 55 economists predicted the economy will contract in the current quarter, while 25 said the same will happen in the Q2. (m&c.com)

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