We now have reports that there is more than a 50 per cent chance that United States will experience another recession in early 2012. Now of course, the US economy hasn't exactly been booming since Recession 2008 but so far it's managed to avoid a double dip recession. But all that could change next year.
Reuters reports that research from the San Francisco Federal Reserve Bank suggests that the European debt crisis is raising the prospects of a recession hitting the US in 2012. It's more likely than not.
The situation in Europe is critical here. As reported in Politico, Europe is falling into recession again and the combination of that in combination with austerity programs will drive the US economy into the ground and push it into recession.
Bernard Baumohl, chief global economist at the Economic Outlook Group has painted a bleak picture for the Washington Times, warning that a European recession will hit every part of the global economy. There's nowhere that's safe. "It's over. An important chapter in the 60-year history of European economic integration is coming to an end. A new, more ominous chapter is about to begin. We now believe the European governments and the European Central Bank do not have the resources to avert a default by Italy, Greece, and very likely Spain and Portugal, too. The US economy will suffer a hit in foreign trade at a time when Americans exports are one of the few bright spots keeping the country out of recession."
The big problem of course is the connection between the American banks and the European banks which will get a big haircut. Fasten your seat belts, it's going to be a bad ride.
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