The world’s largest economy is showing signs of slumping, said the Economic Cycle Research Institute’s Lakshman Achuthan, citing leading indicators.
“The U.S. economy is tipping into a new recession,” Achuthan, the group’s chief operations officer in New York, said in a radio interview today on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “You have wildfire among the leading indicators across the board. Non-financial services plunging, manufacturing plunging, exports plunging. That is such a deadly combination.”
The Federal Reserve’s efforts to support the economy, including holding its benchmark rate at virtually zero since December 2008 and expanding its balance sheet to a record $2.88 trillion -- have done little to reduce unemployment that has hovered around 9 percent since April 2009 or to revive the housing market.
The U.S. economy grew at a 1.3 percent pace in the second quarter after a 0.4 percent expansion in the first three months of the year, the Commerce Department reported yesterday. It earlier estimated that gross domestic product grew 1 percent from April through June.
Purchases of new houses fell in August to a six-month low as the biggest drop in prices in two years failed to lure buyers away from even less expensive distressed properties. Sales dropped 2.3 percent to a 295,000 annual pace, figures from the Commerce Department showed earlier this week.
“We at least have a couple of quarters of worsening economy in front of us,” Achuthan said. “So if you think this is a bad economy, you haven’t seen anything yet.”
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