A recent Wall Street Journal survey of a group of more than 60 economists found that there is a 21% chance of a recession within the next year, up from 10% a year earlier. What are the factors that have led to growing pessimism about the American economy?
The four greatest risks are, the fallout from China’s economic woes, the dearth of investment by American companies, the political uncertainty because of the U.S. presidential election, and the sluggish growth rates that the economy has been exhibiting lately.
But contrary to the view held by many economists, Federal Reserve Chairwoman Janet Yellen is of the opinion that the chances of a recession are “quite low.” She recently said, “The U.S. economy is doing well. My expectation is that the U.S. economy will continue to grow.”
A major cause for concern is the level of business investment by companies. According to a Commerce Department report, capital investment, as well as the amounts spent on raw materials by companies, has been declining consistently. In April, orders for nondefense capital goods excluding aircraft fell by 0.8%. Since September 2014, the decline in this measure has been a massive 12%.