Economists in the United States agree the country is in the midst of a recession, but they seem to disagree when it will end. Disagreement continues at Wednesday's economic forecast from the University of Chicago.
Taking up the pessimists' side is Robert Aliber, a professor of international economics at the University of Chicago's Graduate School of Business. He predicts the U.S. economy will shrink by about 1.5 percent next year. According to him, further interest rate cuts by the U.S. Central Bank, the Fed, are unlikely to make a difference. "The Fed essentially, has used up all of its silver bullets in the effort to slow the slowdown," he said. "From here on out, monetary policy is likely to be impotent."
A more positive outlook comes from U.C. Graduate School of Business alumnus and New York-based financial advisor Joel Stern. He predicts the country's economy will grow by about 1.5 percent. "I believe the recession that we are in is going to end not later than April," he said. "It probably will end as early as February. There is even a small chance that it is over now and we do not know it."
Mr. Stern says the September 11 terrorist attacks caused a lot of Americans to hold onto their money, instead of spending. He says if they feel safer and more confident in the New Year, they are likely to spend that money, boosting the economic recovery.
For business administration professor and international economics expert Marvin Zonis, the September 11 attacks and the U.S. war on terrorism will continue to affect global events and economies next year. In his opinion, Pakistan could be a trouble spot in 2002. "Having taken a huge gamble, Pakistani president Musharraf has to act against not just the religious fundamentalists in Pakistan, who are substantial, but more importantly against major segments of the Pakistani military, from which he arose, which have been committed to and been great supporters of the Taleban," he said.
Mr. Zonis predicts the U.S. government will work hard to keep President Musharraf in office. He also says additional terrorist attacks are likely next year, possibly against U.S.-based business offices and interests overseas.
The University of Chicago forecast comes as two other reports offer a mixed outlook for the U.S. economy. The National Association of Purchasing Management says the service sector of the economy surged in November, suggesting a recovery. But, the Federal Reserve Bank of Chicago says its National Economic Activity Index dropped again in October to its lowest level since March of 1991, when the country was in its last recession. Federal Reserve officials in Washington say they expect a modest and gradual economic recovery next year.