The U.S. economy is “one giant soft patch” on the verge of a recession, economist David Rosenberg of Gluskin Sheff & Associates Inc. in Toronto, said today.
In a radio interview with Tom Keene on “Bloomberg Surveillance,” Rosenberg said the economy is in a “classic pre-recession pattern” and that “we are on the precipice of the economy contracting between now and the winter.”
Rosenberg called consumer spending, which accounts for about 70 percent of the economy, “the weakest link” and said that “housing is clearly not coming up off the bottom.”
“Capital spending is still positive but not enough to offset the other contractionary forces in the economy,” Rosenberg said.
The economy has slowed from last year. Gross domestic product expanded at a 1.3 percent annual rate in the second quarter after a 0.4 percent pace in the first three months of this year, according to Commerce Department statistics.
The economy expanded at a 3.1 percent pace on average in 2010.
The unemployment rate has been at or above 9 percent since April, according to the Labor Department statistics.
In an interview on Aug. 5, Rosenberg put the odds of a recession at 99 percent. “When you’re running the economy so close to zero, you’re like one little shock away from heading into a recession,” he said.
(Bloomberg, August 22, 2011)