What's The Bigger Fear: Inflation Or Recession?
Former Federal Reserve chairman Alan Greenspan says that the U.S. has a ‘one-third probability’ of falling into a recession this year. Greenspan’s outlook contrasts that of his successor, Ben Bernanke, who believes that inflation is a bigger problem for the economy..so who's right?
Chief economist at MBG Information Services, Charles McMillion and Ken Goldstein, senior economist at the Conference Board, debated the biggest threat to the U.S. economy earlier on "Morning Call."
McMillion says the biggest issue facing the economy is recession. He predicts a recession this year and thinks the fed will cut interest rates in June. McMillion believes the U.S. has a lot of debt and a severe lack of saving. “U.S. households are spending more then their entire monthly wages”, said McMillion.
But Goldstein says that there is very little chance that the U.S. is headed for a recession. “Consumers are spending money and consumer confidence his high”, said Goldstein, adding that “profit margins have peaked and costs will continue to increase,” and that the “bottom would have to fall out of this consumer market” for a recession to occur.