Former U.S. Treasury Secretary Larry Summers is predicting there is a 50-50 chance high oil prices and the weak housing sector will drive the U.S. economy into a recession. VOA's Barry Wood reports.

Larry Summers (file photo)

The weakness in the U.S. housing sector was underscored Thursday by a report showing that new home sales declined again last month, registering their steepest drop in seven years. The housing sector is predicted to remain weak for another year.

In addition, oil prices have risen considerably and, at today's prices of $82 per barrel, are 32 percent higher than they were a year ago.

Larry Summers, an economics professor at Harvard University and treasury secretary under President Clinton, says in these conditions, there is a high risk of recession.

"I've said that it is probably not quite 50 percent," he said. "But it is somewhere in that neighborhood."

Summers says the likelihood of recession has increased in recent weeks.

"It's certainly the most dangerous moment in terms of the risk of recession since the aftermath of 2001," he said.

Summers spoke on Bloomberg Television.

But the economic news is not all negative. The Commerce Department reported that the U.S. economy grew by a revised three point eight percent in the second quarter of this year. Growth is likely to have slowed only modestly during the current third quarter.

A recession occurs when the economy declines for six consecutive months. The last US recession was a relatively short and shallow one in 2001.