Click to watch the full interview with UBS International Economist Paul Donavan
Because it is the end of the inventory adjusting in the States, it looks like the markets are plateauing, which then affects exporters in Asia and starts to affect the European economy, but there is no double-dip recession, Donavan told CNBC.
“I don’t think it’s possible that we can talk ourselves in at this stage (into a recession), I think the consumer is too confident,” Donavan added.
But, with a “separate shock, then there is a vulnerability…if you see oil at $150 a barrel, if there’s terrorism, an external shock like that could, with the negative talk, push us in. At the moment all the chatter is doing is creating a lot of volatility in financial markets.”
“Double dip, the last time we saw this was the early 80s, that’s when the ISM is about 37-38, that sort of thing. 56.5, we are a long, long way away from that sort of problem, so I don’t think it was the recent data … I think economists have been right all along, as you would expect,” Donavan said.