Three more economists weighed in today on the prospects of a U.S. recession in 2008. Alan Greenspan, the former Fed chief, spoke in an interview with NPR on Friday and put the odds around 50 percent. Harvard University economist Martin Feldstein also pegged the 50 percent number, according to a Bloomberg report:
“I would put it at about 50 percent,” Feldstein, head of the National Bureau of Economic Research, said in an interview today when asked about the chance of an economic contraction. The risk “clearly has been increasing,” he said.
Feldstein even broached the subject of stagflation, saying that increasing inflation and shrinking GDP was a “danger.” But none of the economists are as close to the actual cold, hard money as Wall Street. HW recently covered a report by Morgan Stanley that predicts a recession next year, and it now also appears that Merrill Lynch has joined the fray (hat tip to the Big Picture blog here): If the above isn’t clear, Merrill Lynch is now predicting a U.S. recession in the next 12 months with a 100 percent probability. Some other voices in the crowd worth noting:
“We’re only halfway through the housing shock,” said Ethan Harris, chief U.S. economist at New York-based Lehman, the fourth- biggest U.S. securities firm by market value. “It’s just a matter of time before the weakness spreads to the rest of the economy.” “I’m not going to sit here and tell you it’s going to turn real strong next year,” said Jim Gillespie, chief executive officer of Coldwell Banker Real Estate LLC, the largest U.S. residential brokerage, according to Franchise Times. “It’s not going to turn real strong next year.” “The whole thing has deteriorated faster and further than we or anyone else had anticipated,” said Ron Muhlenkamp, president of Wexford, Pennsylvania-based Muhlenkamp & Co., which has about $2.5 billion under management and holds shares of mortgage lender Countrywide Financial Corp. and homebuilder Ryland Group Inc. “I know we weren’t predicting things would get this bad,” said Frank Liantonio, executive vice president for global capital markets at New York-based Cushman & Wakefield Inc., the largest closely held real estate services provider. “There were some signs there, but I don’t think anyone anticipated the level of dislocation that was actually created.”
I should be managing funds, apparently, not writing free news and commentary.