MIAMI — The United States is facing conditions that are likely to tip the economy into recession this year despite recent big gains in stock prices, an economist said.
“It’s going to get worse before it gets better. The economy is weakening,” said Anirban Basu, chairman and CEO of Sage Policy Group Inc., a Baltimore-based economic consulting firm.
He gave the keynote address Thursday at the World Captive Forum in Miami, which is sponsored by Business insurance.
Various economic indicators are “screaming recession,” he said.
For example, house prices appear to be in the early stages of price declines, which is a leading indicator of the health of the housing market, Basu said.
In addition, consumer confidence remains low, as a National Federation of Independent Business survey of small business owners shows that few think now is a good time to expand; retail and wholesale inventory is backed up; industrial production falls; layoffs are beginning and likely to accelerate; and long-term interest rates are lower than short-term interest rates, which is often seen as a leading indicator of a recession, Basu said.
In addition, the Federal Reserve has not indicated that it plans to pause its near-year-long rate hikes, he said.
Despite these factors, the major stock indexes rose sharply in January, he noted.
“You̵7;re still going to find a lot of economists who think a recession isn’t coming; I’m not one of them,” Mr. Basu said.