San Francisco: The US economy has a 50 per cent chance of
falling into a depression during the next three years, said
Roger Farmer, a member of the National Bureau of Economic
Research's economic fluctuations and growth programme.
"There's a significant probability things will get worse,"
Farmer, 53, said during a phone interview Friday. "We're
certainly not at the end of the recession and things are getting
worse."
A drop in the Conference Board's index of leading indicators,
released Thursday, underscores econo-mists' expectations that
the recession will be the longest in the postwar era as banks
restrict credit, home and stock values plunge, and job losses
mount. Farmer said he is predicting the US recession will
last at least another year.
"Everything depends on business confidence, and what
I see is declining confidence," said Farmer, who is also
graduate vice-chair of the Economics Department of the University
of California at Los Angeles.
The loss of confidence is leading households and companies
to undervalue assets, which is hurting consumer spending and
investment, he said. A government fiscal stimulus programme
will have a "questionable" immediate effect on consumption
and financial markets, Farmer said.
