NEW YORK ― Auto sales are rising, the unemployment rate has decreased, and consumers are spending an increasing amount this holiday season, but a double-dip recession is still pretty likely, said Beth Ann Bovino, deputy chief economist of global fixed income research for Standard & Poor’s, during a presentation this week.
In fact, the likelihood of another dip in the economy is about 35%, Bovino predicted, noting that improved unemployment data prompted her to lower her estimate from 40%.
Speaking at a Structured Finance Breakfast at the McGraw Hill building in Midtown Manahttan, Bovino tied the likelihood of another recession to the government, both in the U.S. and abroad. For instance, if the European crisis were not a factor, the chance of another recession would be less likely. “It’s a very large factor for the U.S. recovery,” she said.
Bovino dove into the housing market cycle and the fact that housing prices are still down 30% from their peak. Though prices still have a ways to go before reaching pre-crisis levels, Bovino suspects they will bottom out by early next year.
Bovino also noted the impact of trade, the aging population and how it will boost government spending in years to come, and how weak employment has affected construction in the U.S. Overall, she noted that recovery is in the works, though it may not be at a speed that most would hope.
“The good news is that the recovery has certainly gained momentum after the first half of this year,” Bovino said. “I still believe the bad news, of course, is that it’s still at a snail’s pace,” she said.
What’s your take: What’s the likelihood the recession will take another dip?
