Recession is still a risk in the US and in the Old Continent
Despite some signs of improvement in the economy, in Europe and the United States, the hypothesis of a recession is not over yet. Especially in view of the many risks associated with rising inflation and to central bank policy. He is convinced of it Joseph StiglitzNobel Prize in Economics in 2003 and professor at Columbia University.
“I think there is a risk of a recession, Germany has already entered a technical recession. I think that in the United States the problem is worse than what is believed, because with the tightening of monetary policy there are also repercussions on the availability of credit” explained Stiglitz, on the sidelines of the panel he participated in as part of the 18th edition of the Trento Festival of Economics, entitled “The future of the future. The challenges of a new world”.
In the United States, the crack of Silicon Valley weighs
“The financial crisis, with the crack of Silicon Valley Bank and the difficulties of others regional banks, implies that lenders will take a more conservative approach to lending. Some argue that this is the equivalent of a further one or two percentage point hikes in interest rates, and many fear that the Federal Reserve may further raise the cost of borrowing. There is therefore a risk of a slowdown”, said the economist. Of course, substantial stimulus measures have been enacted in the United States, such as the IRA and the Chips Act. “This could offset some of the monetary contraction.”
In the Old Continent the situation could be more complicated
“I fear that in Europe, where there are no equally powerful fiscal stimuli, there won’t be this counterbalance. And I also fear that the agreement that is taking shape in the United States with the extremist fringe of the Republican party to solve the problem ofraising the debt ceiling could weaken the economy. So both in the US and in Europe I think there are real threats that could increase the probability of a recession,” she concluded.