(Bloomberg News) The two-year-old U.S. recovery's staying power may be diminishing as consumers and the government pare spending, say five of the nine economists on the academic panel that dates recessions.
"This economy is really balanced on the edge," Harvard University economics professor Martin Feldstein, a member of the Business Cycle Dating Committee of the National Bureau of Economic Research, said yesterday in an interview on Bloomberg Television's "Surveillance Midday" with Tom Keene. "There's now a 50 percent chance that we could slide into a new recession. Nothing has given us much growth."
A greater-than-expected slowdown in the first half of 2011 poses risks for the world's largest economy, said economist Robert Hall of Stanford University, the panel's chairman. Gross domestic product climbed at a 1.3 percent annual rate from April through June after a 0.4 percent gain in the prior quarter that was less than earlier estimated, Commerce Department figures showed July 29.
"The slower the growth rate, the more likely it is that an adverse shock would cause a recession," Hall said in an interview.
While the committee doesn't forecast the odds of a recession, individual members can make their own predictions, Hall said. The panel took more than a year to determine that the deepest contraction since the 1930s ended in June 2009, a finding made in September 2010.
Depth of Recession
Gross domestic product shrank 5.1 percent from the fourth quarter of 2007 to the second quarter of 2009, compared with the previously reported 4.1 percent drop, the Commerce Department said last week. The second-worst contraction in the post-World War II era was a 3.7 percent decline in 1957-58.
"The risks have gone up for another recession compared to where we were six months ago," Christina Romer, a former chairman of the White House Council of Economic Advisers and a professor at the University of California, Berkeley, said in a Bloomberg Television interview Aug. 1 on "Street Smart" with Carol Massar and Matt Miller. She predicted "anemic, but positive, growth."
Committee members cited weakness in housing, employment, and business confidence and efforts to reduce debt by consumers and government as hurdles to growth. Four academics on the panel either declined give odds of a recession or didn't respond to requests for comment.
Consumer spending unexpectedly dropped in June for the first time in almost two years, while the savings rate rose, Commerce Department figures showed yesterday in Washington.