Dudley Says Fiscal Shock Could Cause Another U.S. Recession

Federal Reserve Bank of New York President William C. Dudley said a failure to avert a shock in fiscal policy next year could subtract 3 percentage points from economic growth and cause a recession.

If “no policy action” is taken by Jan. 1, the U.S. may suffer a 3 percentage point reduction in gross domestic product, Dudley said at a press conference in New York today. “That would be a huge shock” to an economy that’s recovering at a disappointing pace.