US: Recession Fears Resurface - ING
Research Team at ING, suggests that the further decline in US GDP growth
in 1Q16 could resurrect thoughts of a US hard landing – the evidence is
still mixed, but warning signs are mounting.
“We take a look at the current likelihood of a US recession and assess the usefulness of a range of models/indicators in signalling the next economic downturn.
• Weak (0.5%) 1Q16 GDP marks the third-consecutive slowdown in US GDP – this is beginning to look like a trend – and we can’t blame the weather this time;
• But it is not unprecedented – and we need more evidence before we start calling “Recession”;
• Our biggest concern is with business investment, on which politics and uncertainty are weighing heavily;
• Consumer spending is also weaker than it should be – but we can put this down to the end of the oil windfall;
• Some parts of the US economy remain in reasonable shape – recession is still a tail risk rather than a strong probability;
• But there are some growing warning signs – not least in residential construction and even the labour market – and these will need careful watching.”