Another recession is still considered unlikely, but not out of the question, especially after a recent spate of bad economic news. So more forecasters are at least running it through their computer models. Economists at Goldman Sachs put the chances at between 25 percent and 30 percent. Mohamed El-Erian, CEO of OC-based PIMCO, the world's biggest bond fund, says it's 25 percent. From Real Time Economics:
The new twist is that Wednesday's data suggest the cloudy outlook is curtailing spending on business equipment. New orders for non-defense capital goods excluding aircraft plunged 8.0% in July, wiping out the gains of the previous two months. If new bookings fall again in August, be afraid. Business spending on equipment has been a growth leader in this recovery, contributing more to GDP growth over the past three quarters than the consumer sector has. Lose business spending and even 2% growth looks unreachable.
On Friday, the government will revise its second-quarter gross domestic product numbers, and most everyone expects the initial 2.4 percent growth estimate to be lowered, perhaps to under 2 percent. That's really low - certainly too low to hire many workers - and what's really worrisome is that the economy seemed to be percolating during that April-June period. Some economists worry that third-quarter GDP could be below 1 percent.