The economy in the U.S. will face a protracted period of weak growth rather than slide into another recession, said Jeffrey Frankel, a professor of economics at Harvard University.
“This is a long slump we’re in,” Frankel, a member of the National Bureau of Economic Research committee that determines when recessions begin and end, said in an interview today on Bloomberg Radio’s “On The Economy With Michael McKee.” “In that sense, it’s like the 1870s or 1930s. You have a recovery but not enough to create jobs or get the economy going.”
Recent reports, including the Labor Department’s data today that showed payrolls were unchanged in August and unemployment held at 9.1 percent, have fueled concern the world’s largest economy is contracting barely two years into a recovery. The last recession ended in June 2009, the NBER announced in September 2010.
Frankel put the odds of another recession at less than 50 percent. He said that although revisions to gross domestic product issued in July showed the recovery was much weaker than previously estimated, members of the NBER Business Cycle Dating committee will probably not alter their decision pinpointing the end of the slump.
“I suppose we could change our mind on that, the statistics have been revised,” said Frankel. “But we’ve never done that before and I don’t think it’s likely.”
Therefore, any contraction beginning now will be considered a new slump, he said. “I think we’ll escape a second downturn, but if we didn’t, that would qualify as a second recession,” said Frankel, who teaches economics at Harvard’s Kennedy School of Government in Cambridge, Massachusetts.