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Analysts: Prospects for US Recession Seen as Slight


While the dollar and the US stock market have fallen over the past few weeks, economic data suggests that even with record high oil prices economic activity in the United States, while not exactly flourishing, is holding steady. VOA's Barry Wood has more.

The Commerce Department reported Wednesday retail sales in the United States increased by 0.2 percent in October. It was the slowest advance since August and a significant slowdown from the four percent rise in September.

Ian Shepherdson of High Frequency Economics says the annualized pace of retail sales has slowed to its lowest level in five years. He says with consumer confidence waning in tandem with sharply higher oil prices and a weak housing market, the Christmas gift buying season will be weak.

That view is not shared by Jeremy Stretch, a market analyst at Rabobank in London. He believes the United States will avoid a significant slowdown.

"I wouldn't necessarily overplay the risk of a recession in the United States at this juncture," said Jeremy Stretch. "I think the markets are probably getting too excited about the risks of a downturn turning into something more significant in 2008."

Stretch spoke to Bloomberg Television.

Surjit Bhalla is a money manager at Oxus Investments in New Delhi. In Washington for a conference on exchange rates, Bhalla also discounts the prospects of a U.S. recession.

"I don't belong to the camp that thinks the U.S. economy is going to go into recession," said Surjit Bhalla. "I think we'll have a growth slowdown and I think that will be temporary. By temporary I mean two or three quarters."

A recession is defined as two consecutive quarters of economic decline.

The New York stock market has been particularly volatile in recent days with sharp rises and falls. Most market indexes touched record highs early in October. They have declined since, but not by that much.

Stock markets are usually regarded as barometers of future economic activity. In the third quarter of the year the U.S. economy expanded at a nearly four percent annual rate.

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