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January 10, 2008 at 02:37 PM
Two economic experts are predicting the U.S. economy will cool this year without quite freezing.
“The big question today is whether the U.S. economy will face recession,” Edward Campbell, an investment strategist in the investments arm of Prudential Financial, Newark, N.J., said recently at a forum organized by Prudential. “The answer is that it will avoid it, but just barely.”
Another forecaster, Robert Doll, global chief investment officer for equities at Black Rock Inc., New York, made a similar prediction at a forum sponsored by his own firm.
The U.S. will narrowly escape a recession in 2008, but “even if we skirt one, it’s going to feel a lot of days as if we are in one,” Doll said.
Campbell allowed for some possibility that a recession could still occur.
The risk of entering a recession might be as high as 40%, Campbell said.
But “the U.S. economy is a resilient animal,” and sluggish growth of 1% to 2% seems more likely, Campbell said.
Exports will contribute significantly to gross domestic product growth this year, and a soft economy could help the stock market do well, by forcing the Federal Reserve Board to lower interest rates, Campbell predicted.
Doll estimated U.S. GDP will grow 1.5% to 2% this year, and that the world economy will grow about 2.9%.
Factors that should cushion the economy against housing market weakness include rising liquidity, lower rates, trade growth, job growth and wage gains, Doll said.
