Economists' lump of coal: recession

Dec. 25, 2007 at 9:40 AM

WASHINGTON, Dec. 25 (UPI) -- Economists predict a U.S. economic recession next year, despite decent consumer spending in the face of credit and housing woes, and high energy prices.

Leading the discussion are Harvard University economist Martin Feldstein, former Federal Reserve Chairman Alan Greenspan and ex-Treasury Secretary Lawrence Summers. The economists say the likelihood of recession arises from the housing collapse and growing credit market problems, the Washington Times reported Tuesday.

The predictions came as the economy posted a robust, nearly 5 percent growth rate during the third quarter and surging consumer spending.

These indicators, other experts say, is why the economy is expected to "muddle through." They predict growth rates between 0.5 percent to 1.5 percent in the fourth quarter of 2007 and first quarter of 2008.

"A significant proportion of the investment community thinks that the U.S. economy is either teetering on the brink of recession or is already entering one," said Stephen Stanley, a RBS Greenwich Capital economist.

But persistent good news on consumer spending hasn't impeded predictions of recession.

Bill Gross, chief executive of PIMCO, the world's largest bond fund, told the Financial Times: "If I had to be bold, I'd say we began a recession in December."

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