IMF and Boehner both brace for recession
In their just released six-month World Economic Outlook, the IMF cautions America that the global economy is currently “in a dangerous place” and could pose serious problems for the United States. As crippling conditions sweep across the globe, the IMF warns that another recession for the US shouldn’t be unexpected.
"Global activity has weakened and become more uneven, confidence has fallen sharply recently and downside risks are growing," reads the latest report from the IMF. Abroad they have downgraded their expected growth forecast for the UK down to 1.1 percent in 2011 and they expect it to be only slightly greater in the US with a rate of 1.5 percent for the remainder of the year. They hope to see slight improvement domestically in 2012, with a growth forecast of 1.8 percent for next year. These statistics are around three percentage points lower than originally predicted.
The economic counselor of the IMF, Olivier Blanchard, tells reporters in Washington that there is "a widespread perception" that the crisis has already gone out of control in the eurozone. "The eurozone is a major source of worry. This is a call to arms," adds Blanchard. He says it is “absolutely essential” that things change. If not, a double-dip recession could be on the horizon both abroad and in the US.
Last week economists polled by The Wall Street Journal suggested that the likelihood that America goes into a double-dip recession is around one-in-three. Purchasing power of Americans dropped in August, as did consumer expectation. That same month, of course, saw a job creation rate domestically of zero.
The Journal and the IMF aren’t the only ones crossing their fingers, either. Speaker of the House John Boehner told the Fox Business Network that week he has “been worried about our economy” and described its current pace as “limping along.”
"When you look at what's been happening in Greece … it ought to send a real signal to the American people that the best thing we can do to help our economy right now is to get our debt under control,” adds Boehner.
"We're still the safest bet in the world. We're still the safest place to invest in the world," says the speaker. "But we won't be if we're not willing to tackle our spending problem."
President Barack Obama verbally attacked Boehner during a speech from the White House yesterday morning, calling the speaker’s efforts during this year’s debt discussions as not “all that great,” “not smart” and “not right.”
To Michael Pento of Pento Portfolio Services, the outcome is almost certain. While the IMF may warn that something big has to happen soon to avoid catastrophe, Pento asks RT, “What does that really mean?”
“How could they possibly be surprised that global GDP growth will be sub-par both this year and next year and as far as the eye can see?” Pento asks RT.
With a default from Greece appearing eminent, Pento says that collapse will only come to the United States in a few years’ time. From there, says Pento, the US, Japan and Europe can all expect significant increases in inflation.