Feldstein Says U.S. Recession Is More Likely After Jobs Report

from Bloomberg:



Feldstein Says U.S. Recession Is More Likely After Jobs Report

By Steve Matthews

Jan. 6 (Bloomberg) -- Harvard University economist Martin Feldstein, head of the group that dates economic cycles in the U.S., said the odds of a recession are more than 50 percent after a report showing the unemployment rate jumped.

``We are now talking about more likely than not,'' Feldstein, president of the National Bureau of Economic Research, said in an interview yesterday in New Orleans. ``I have been saying about 50 percent. This now pushes it up a bit above that.''

The jobless rate rose to 5 percent in December, the highest in two years, from 4.7 percent in November, a government report showed last week. Payrolls rose by 18,000, the least since August 2003.

The U.S. economic expansion is cooling after a third- quarter surge as the housing slump enters its third year and consumer spending slows. Former Federal Reserve Chairman Alan Greenspan and ex-Treasury Secretary Lawrence Summers are among those raising the prospect of a recession.

The rise in joblessness will hurt consumer confidence, Feldstein said in the interview. He was in New Orleans to speak at an economics panel discussion on productivity that was part of the annual meeting of the Allied Social Science Associations.

``Consumers, with essentially no growth in jobs in December, are going to be more nervous about the future,'' said Feldstein, 68. ``They are going to be a little more reluctant to spend, and that is going to put a further drag on growth in 2008.'' .....(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=acU95NFzpSNY&refer=home

but the consumer credit issues in general

What has been supporting this economy is debt

Now that fuel and food have added to the burden, lowering interest rates is NOT going to get people out to start buying. They will be more concerned about paying for essentials