Harvard economist Kenneth Rogoff has made the case that despite weaker U.S. data, people calling for an imminent recession are off the mark.
In an interview with Bloomberg TV he said it’s just as likely that growth could bounce back:
Well, I think the US economy is slowing a bit but I think it would be jumping the gun to say we’re going into a recession right away. Our baseline growth is lower, there are seasonals in here, its difficult to know exactly how to interpret this, but I would guess that our growth is in the 1.5 per cent range in the United States right now. Obviously that’s vulnerable to things happening around the world, but it could just as well bounce back to 2 per cent in the near term as well.
In fact, Rogoff’s work on crises has found that after a deep financial crisis like we’ve just experienced, a much slower recovery is to be expected.
…You don’t bounce back in six months like after a usual recession, it can take four and a half years just to get back to the same GDP per capita level that you started at. Unemployment can take a similar amount of time. We’re very much tracking that in a way. I think people are sort of overreacting to small variations in the data.
The United States is still vulnerable to slowdowns Europe and China. Rogoff goes on to say that the current Eurozone agreement has bought them a few months at most.
Watch the entire interview at Bloomberg TV: