Economy slowing; recession in 2007?
WASHINGTON — There is little doubt the economy is slowing. What is unclear is how long the decline will last or how deep it will be.
The latest evidence of a slowing economy came Wednesday in reports showing a dip in the rate of growth in the manufacturing sector and a further decline in housing construction.
Also on Wednesday, Merrill Lynch warned clients that its "recession-risk indicator" is now pointing to a 51 percent chance of a recession in the next year, the highest such odds since the last recession in 2001.
The indicator has only twice hit the 51 percent line without being followed by a recession, Merrill Lynch chief North American economist David Rosenberg said in a report titled, On a Knife's Edge.
The question of whether there will be a recession is "still a tough call," he says. But "what the indicator represents is, at a minimum, a significant slowing in growth."
Joel Naroff of Naroff Economic Advisors says there are still enough factors in the economy's favor to keep it afloat. In particular, job growth is still solid, and wages are rising while interest rates are low, historically speaking. But that doesn't mean the economy is poised for a big takeoff.
"I'm not concerned about a recession at all, but I do think that we could be looking at (subpar) growth ... this quarter and the first half of next year," he said.
