Bernanke Is Wrong! Double-Dip Recession Looming, Forecaster David Levy Says
Ben Bernanke testified before Congress Wednesday that the U.S. economy is recovering, and he predicts the nation will not experience a double-dip recession.
Economist David Levy is far less optimistic — he sees a 60% chance of a another recession in 2011.
Levy, who is chairman of The Jerome Levy Forecasting Center, says the factors that caused profits to rebound at the end of 2009 and the beginning of 2010 will not be there to bolster the economy in the coming months.
U.S. consumers, particularly high net worth individuals, who were terrified of losing their money in 2009, started spending again from the holiday season last year into the first few months of 2010. Now, they’ve tensed up again, he says. As a result, the profits of retailers, particularly high-end stores, are falling, as detailed here.
“We are starting to see those numbers slip up, become a little below plan, as we’ve gotten about eight weeks from that strength,” Levy says. “That is going to fade more.”
According to Levy, the deficit spending that lifted the economy is tapering off, and the private sector cannot maintain the recovery on its own.
“What we should do is more long-term federal investments, infrastructure repair, education, rebuild military hardware,” Levy says. “If we are going to run a deficit that is creating debt, we should be putting on assets at the same time.”
(Excerpt) Read more at finance.yahoo.com
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