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04-10-2008, 09:26 AM
Economic rebound by summer unlikely, ex-labor chief warns
NEW YORK (CNN) -- Former Labor Secretary Robert Reich warned Americans on Wednesday not to be overly optimistic that the U.S. economy might rebound by the end of summer.
"More realistically, we are going to go into 2009 with a serious recession," Reich, now a professor at the University of California at Berkeley and author of the recent book "Supercapitalism," said on the CNN program "Issue #1."
Reich, who served in the Clinton administration in its first term, suggested that there is a small chance the United States is heading toward a depression.
"I think there's no more than 20 percent chance of a depression," Reich said.
Although Reich stressed that a depression is unlikely, he said that what's happening with the economy today is close to a perfect storm.
"You've got food and energy prices, fuel prices going way way up," he said. "You've got wages stuck. You've got people who are losing their jobs. You've got housing prices going down. I mean, it's pretty bad." VideoWatch Reich discuss the state of the economy »
Economists disagree over whether the United States is in a recession. Federal Reserve Bank Chairman Ben Bernanke told Congress last week that a "recession is possible," but minutes of the central bank's latest meeting indicated that some members are concerned that a "severe and protracted downturn" in the economy could last into next year.
The Fed also said that according to projections prepared for the meeting, Fed staffers now expect the nation's gross domestic product, the broadest measure of the U.S. economy, to shrink in the first half of this year. This is the clearest signal yet from the central bank that the economy could already be in a recession.
The National Bureau of Economic Research is the official arbiter of when recessions begin and end, and the bureau often does not declare an official recession until months after a downturn begins. But a common shorthand definition for a recession is two consecutive quarters of declines in GDP.
According to the minutes, the Fed said its staff is projecting a only a slow rise in GDP in the second half of the year, with a decided risk that the slump could continue.
A depression is typically defined as a severe recession: a significant drop in GDP, accompanied by large-scale job loss, decrease in industry and wages and an increase in reliance on public assistance, often lasting for several years.
The last depression experienced by the U.S. economy was the Great Depression of the 1930s. The United States last experienced a recession from March to November 2001, an eight-month period that followed the country's longest-ever expansion, from March 1991 to March 2001, according to the economic bureau.
All AboutNational Economy • Robert Reich
Find this article at: CNN (http://www.cnn.com/2008/US/04/09/reich.outlook/?iref=mpstoryview[/url)
NEW YORK (CNN) -- Former Labor Secretary Robert Reich warned Americans on Wednesday not to be overly optimistic that the U.S. economy might rebound by the end of summer.
"More realistically, we are going to go into 2009 with a serious recession," Reich, now a professor at the University of California at Berkeley and author of the recent book "Supercapitalism," said on the CNN program "Issue #1."
Reich, who served in the Clinton administration in its first term, suggested that there is a small chance the United States is heading toward a depression.
"I think there's no more than 20 percent chance of a depression," Reich said.
Although Reich stressed that a depression is unlikely, he said that what's happening with the economy today is close to a perfect storm.
"You've got food and energy prices, fuel prices going way way up," he said. "You've got wages stuck. You've got people who are losing their jobs. You've got housing prices going down. I mean, it's pretty bad." VideoWatch Reich discuss the state of the economy »
Economists disagree over whether the United States is in a recession. Federal Reserve Bank Chairman Ben Bernanke told Congress last week that a "recession is possible," but minutes of the central bank's latest meeting indicated that some members are concerned that a "severe and protracted downturn" in the economy could last into next year.
The Fed also said that according to projections prepared for the meeting, Fed staffers now expect the nation's gross domestic product, the broadest measure of the U.S. economy, to shrink in the first half of this year. This is the clearest signal yet from the central bank that the economy could already be in a recession.
The National Bureau of Economic Research is the official arbiter of when recessions begin and end, and the bureau often does not declare an official recession until months after a downturn begins. But a common shorthand definition for a recession is two consecutive quarters of declines in GDP.
According to the minutes, the Fed said its staff is projecting a only a slow rise in GDP in the second half of the year, with a decided risk that the slump could continue.
A depression is typically defined as a severe recession: a significant drop in GDP, accompanied by large-scale job loss, decrease in industry and wages and an increase in reliance on public assistance, often lasting for several years.
The last depression experienced by the U.S. economy was the Great Depression of the 1930s. The United States last experienced a recession from March to November 2001, an eight-month period that followed the country's longest-ever expansion, from March 1991 to March 2001, according to the economic bureau.
All AboutNational Economy • Robert Reich
Find this article at: CNN (http://www.cnn.com/2008/US/04/09/reich.outlook/?iref=mpstoryview[/url)