A growing number of leading business economists believe the U.S. economy may be heading for a recession. VOA's Barry Wood reports from a meeting of the National Association of Business Economics in Washington.
U.S. economic growth has slowed in recent months to what most experts believe is a two to 2.5 percent annual rate. A growing number of them predict the slowdown will continue and the U.S. economy may end up in a recession later this year.
Jim Smith of Parsec Financial in New York says a recession is inevitable because the central bank in 2005 raised interest rates too high.
"Look for the U.S. economy to go into recession [in the range of May 2007 to March 2008]," he said. "I have [predicted] a very short and very mild recession with a very strong rebound in the fourth quarter of this year. And real gross domestic product growth next year of 4.2 percent."
Smith is predicting a recession as mild as the one that occurred in 2001. Former central bank chief Alan Greenspan recently said he foresees a one in three chance of recession this year.
Two prominent energy economists agreed it is impossible to predict where oil prices are headed in short-term. One foresees a downturn toward $40 a barrel, the other steady to higher prices near the current $59 level.
Michael Lynch of Strategic Energy and Economic Research says oil prices will fall as the economy weakens.
"Economic weakness usually really puts a damper on oil demand," he said. "I suspect we're going to see that this year. And I think that is making some people pretty nervous right now."
Energy analyst Kevin Lindemer of Global Insight says the remarkable thing about the sharp oil price rise of 2005 is that it did not trigger a recession. Instead the U.S. and world economy registered strong growth even though oil prices more than doubled.
Lindemer says a recession did not occur then because major economies are today much less dependent on energy than they were a decade ago. Conservation, he says, is accelerating as prices remain at historically high levels.