'Gigantic' Job Losses Could Depress Recovery: Economist
Larger than expected job losses could slow down a global economic recovery, economist Roger Nightingale from Pointon York told CNBC's "Worldwide Exchange."
“There are going to be gigantic increases in unemployment,” Nightingale said. “What would that do to sentiment? What would that do to consumer spending? I suspect what it will do is depress the recovery.”
Job losses combined with a cyclical downturn in about two years, could give way to a depression “that takes our legs away,” Nightingale warned.
(Watch Video for full interview)
Nightingale did say we are due for a global economic recovery but it is in jeopardy.
“Just because you get a cyclical recovery doesn’t mean … that the secular problem is going to wane," said Nightingale. He warned that unemployment rates would continue to rise dramatically over the next year.
Nightingale said that even during the Great Depression of the 1930s there was a cyclical recovery, but it was soon followed by a cyclical downturn.
In regards to the ZEW Index data (German analyst and investor sentiment) released Tuesday, Nightingale acknowledged that the numbers were better than expected, but said, “It still isn’t suggesting an improvement in conditions. It’s just suggesting that the deterioration is rather slower than it has been.”
He added, “We shouldn’t be too optimistic at the moment.”