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MIAMI – The United States faces conditions that will likely tip the economy into recession this year despite recent big increases in stock prices, an economist said.
“It’s going to get worse before it gets better. The economy is weakening,” said Anirban Basu, chairman and CEO of Sage Policy Group Inc., a Baltimore-based economic consultancy.
He gave the opening keynote address Thursday at the World Captive Forum in Miami, which is sponsored by Business Insurance.
Various economic indicators are “screaming recession,” he said.
For example, home prices appear to be at the early stage of price declines, which is a leading indicator of the health of the residential construction market, Mr. Basu said.
In addition, consumer confidence remains low, as a National Federation of Independent Business survey of small-business owners shows that few think now is a good time to expand; retail and wholesale inventories are backed up; industrial production is falling; layoffs are beginning and will likely accelerate; and long-term interest rates are lower than short-term rates, which is often seen as a leading indicator of a recession, Mr. Basu said.
In addition, the Federal Reserve has not indicated that it plans to pause its nearly year-long hikes in interest rates, he said.
Despite these factors, the major stock indices rose sharply in January, he noted.
“You’ll still find many economists think a recession is not coming; I am not one of them,” Mr. Basu said.