So recession probabilities have ticked up, but it’s not too late to avoid it, right? Some major strategists are out with improved economic outlooks this morning…
A string of stronger-than-projected statistics — capped by the news on Oct. 7 of a 103,000 rise in payrolls last month — has prompted economists at Goldman Sachs Group Inc. and Macroeconomic Advisers LLC to raise their growth forecasts for third quarter growth to 2.5 percent from about 2 percent. That’s nearly double the second quarter’s 1.3 percent rate and would be the fastest growth in a year.
“The U.S. economy doesn’t look like it’s double-dipping at all,” said Allen Sinai, president of Decision Economics Inc. in New York. “But it is a crummy recovery.”
That recovery still faces what economist Chris Rupkey in New York calls “a lot of headwinds.” These range from the sovereign-debt crisis in the euro zone — and increasing likelihood of a recession there — to political gridlock in the U.S. over the budget.
“We can skirt a recession,” said Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. “But if headlines worsen in Europe and cause a major stock-market rout, it could lead to a loss of confidence here on the part of businesses and consumers and make forecasts for a recession a reality.”
As bad as things have seemed this summer/fall, it is important to recognize that we’re not headed to a recession so long as there is no “trigger”, the concern is that a China or Euro shock could serve is that trigger which is why we’re paying such close attention after all.