The United States economy is stagnant and its recovery will last longer than expected, said the former president of the North American Federal Reserve, Alan Greenspan. If a few months ago, the economist warned of a stronger slowdown than expected, "at the moment the growth of the economy is zero," Greenspan assured today in a conference in Jeddah, the second city of Saudi Arabia, where confirmed their fears that the world's largest economy is about to enter a recession.
The message of the once all-powerful Greenspan, who already shook the stock markets when he launched his first warnings about the evolution of the US economy at the beginning of the year, has coincided with the publication of a report by the National Association of Business Economics (NABE) that reduces the 0,4% its forecasts for the first quarter of this year.
"The economic recovery will take longer than usual," he added, while trying to reassure the markets by stating that the globalization of trade will reduce the effects of the recession in the United States domestic market.
In a revision of its forecasts made public last week, the Federal Reserve lowered its growth objectives for 2008 to between 1,3 and 2% due to the persistence of the mortgage crisis and tensions in the credit markets.
Likewise, the American issuing institute expressed its concern that the effects of the crisis will last longer than expected despite the successive interest reductions it has carried out to the current 3%.
In this sense, for Greenspan, the unstoppable rise to highs of the barrel of oil, which reached a new record of 101,32 dollars last Wednesday, "will go further." A factor that has kept inflation levels high in the United States and slowed down the already low levels of growth.
The truth is that more and more economists believe that the world's leading power will suffer a recession. As stated this Monday in a statement by the National Association of Business Economics (NABE), economic growth in the United States will not exceed 0,4% year-on-year in the first quarter of 2008.
The 49 analysts consulted by the NABE estimate that the increase in the US Gross Domestic Product (GDP) will be even lower than in the fourth quarter of 2007 (0,6%), due to the weakness of consumption and the real estate crisis.
Effects of Bush's measures
For the second quarter, growth of 1% is expected, given that the economic recovery plan and the drop in interest rates will take effect in the second half of the year, with a year-on-year increase in activity of 2,8%.
Growth will not exceed 1,8% year-on-year in the fourth quarter, less than the 2,6% projected by NABE economists in their previous study, which dates back to November, and which could reach 2,9% in next year, according to them. But, despite these figures, more and more NABE economists are mentioning the danger of a contraction in economic activity.
Currently, 45% of them estimate that a recession before the end of the year is inevitable, but that it will be insignificant and short-lived, according to the majority of pessimists. "Only a small minority projects a deep and prolonged contraction of economic activity," says the NABE.
Despite the reduction in their forecasts, business economists foresee a resumption of inflation of 3% on an annual average, against 2,5% in the November survey. Excluding energy and food, core inflation should be set at 2,0%, the upper end of the band (1% to 2%) officially announced by the Federal Reserve.