Significant Slowdown in U.S. Growth
Nouriel Roubini thinks the number is going to decelerate further in Q4, to less than 1%. While I basically share his bearish outlook on the U.S. economy, I find it less likely that it will be really that low in Q4. I am hesitant about making precise forecasts with so little data available, but the falling oil prices will probably boost consumer purchasing power enough to keep it above 1%. However, it will probably be closer to 1% than the 3.5% Morgan Stanley is forecasting.
And the boost from falling oil prices will be a one-time event, whereas problems coming from the imbalances created by Alan Greenspan will continue to pull down the U.S. economy-and do so with increasing intensity. The imbalances created by Greenspan have not disappearing or even been reduced, they have in fact been aggravated. Meaning that Roubini might very well be right in forecasting a recession by Q1 or Q2 2007.