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April 09, 2007

The "r-word" returns

Former Federal Reserve Chairman Alan Greenspan recently uttered the r-word -- recession -- and now others are, too. In today's Economic Perspective, N.C. State University economist Mike Walden takes a look at two questions: Has the risk of a recession suddenly gone up? And are we about to enter another recession?

"My answers are yes and no: Yes to the fact that I think the risks of a recession are higher this year than last, but for no other reason than we are now in the sixth year of economic expansion, and when you get farther into an economic expansion, the risk for a recession go up," says Dr. Walden, a professor of agricultural and resource economics.

"Many economists put the risk maybe at no more than 10 or 20 percent, however, for this year. So I don't think we are going to have a recession this year. But that doesn't mean we are never going to have one. In fact, we will," Walden adds. "The last two recessions have come about nine years into an economic expansion. So if you use that as your barometer, maybe look for a recession around the turn of this decade, say around 2009 or 2010."

Posted by deeshore at April 9, 2007 08:36 AM