Dutch Bank Predicts U.S. Recession In 2007

Posted In: Consumers, Currencies, Dollar, Economy, Employment, GDP, Gasoline, Recession, Unemployment

Yesterday, Dutch bank ABN AMRO announced it expects the U.S. economy to “dip into a slight recession in the fourth quarter and the first three months of 2008,” according to Reuters. ABN AMRO economist Ruben van Leeuwen pointed out that higher gas prices and a weakening labor market are taking its toll on U.S. consumers, who have been keeping the economy afloat. “The outlook for consumption is definitely more negative than it was a few weeks ago,” van Leeuwen said. The economist added, “Most say employment growth is positive and that will support consumption, but we think it will turn negative.”

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ABN AMRO analysts predict that U.S. gross domestic product (GDP) will shrink by an annualized 0.2% in both the fourth quarter of 2007 and the first quarter of 2008, with the U.S. economy recovering afterwards. Meanwhile, U.S. imports are projected to decline due to lower domestic demand, while exports will hold up due to the low value of the U.S. dollar against other major currencies.

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