The U.S. economy looks set to deliver a repeat performance in 2012: for the third straight year, it may suffer a swoon yet not slip into a recession.
“I don’t think the slowdown will be any more consequential than the past two years,” said John Ryding, a former Federal Reserve researcher who is chief economist at RDQ Economics LLC in New York. “There are positives out there in the economy. We’ll avoid a recession.”
Policy makers elsewhere face even more pressure to come up with ways to boost their economies. The European Central Bank may cut its benchmark interest rate from 1 percent as soon as this week, Holger Schmieding, chief economist at Berenberg Bank in London, said in a June 1 report. China will respond with a 2 trillion yuan ($314 billion) fiscal stimulus this year and next, according to Donald Straszheim, senior managing director of New York-based ISI Group.
Investor nervousness over the world economy has pluses and minuses for U.S. households. On the negative side, it has pushed down stock prices, reducing household net worth. On the positive side, it has helped bring down gasoline prices and mortgage rates.