Morgan Stanley Asia chairman Stephen Roach believes that there is a 1-in-3 chance that the US relapses into recession, should the economy encounter any further economic shocks.
Speaking at The World Economic Forum from the Chinese port city of Dalian, he explained that the US consumer is dead and “not coming back”.
Thus the current fragile recovery could be derailed by something as simple as a major storm or labour strike.
Bloomberg: “The recovery is going to be so anemic, especially in the U.S., that the economy on an underlying basis is going to be a lot closer to the stall speed than would be the case in a normal V-shaped recovery,” Roach said. “Stall-speed economies are risky economies because if you have one of these shocks out of the blue and you’re barely growing at the stall speed or a little bit faster, you can have a relapse pretty darned quickly.”