The R-Word

THE R-WORD….Kevin Hall of Knight Ridder reports that economists are becoming increasingly bearish about the U.S. economy:

Economic forecasters and Wall Street analysts are quietly hedging their bets after months of rosy reports about a vibrant U.S. economic outlook. They’re now mentioning the growing possibility of recession ahead.

Why? Soaring gasoline prices, nightmarish home-heating costs this winter, plunging consumer confidence, rising interest rates and falling new-home sales.

…. Executives at Wal-Mart, the country’s biggest retailer, are warning of weaker sales ahead as high gasoline and home-heating prices eat their customers’ cash.

This week, the government reported that housing starts fell in August, and July starts were revised downward. Stephen Roach, the chief economist for Morgan Stanley, the giant investment bank in New York, warns that America is a “shoestring economy,” kept afloat only by reckless borrowing by consumers and the government alike. He thinks a slowdown in home sales will expose how much economic growth has been fueled by risky borrowing against home equity.

This is still a minority view, apparently, but it’s growing. Something to keep in mind in case you’re contemplating telling your boss exactly what you think of him.

Support Nonprofit Journalism

If you enjoyed this article, consider making a donation to help us produce more like it. The Washington Monthly was founded in 1969 to tell the stories of how government really works—and how to make it work better. Fifty years later, the need for incisive analysis and new, progressive policy ideas is clearer than ever. As a nonprofit, we rely on support from readers like you.

Yes, I’ll make a donation