Economists are divided over the outlook for the US economy, with a number cautioning that it is premature to suggest the world’s largest economy is heading for a downturn.
If it does, however, it would have wider implications.
“What happens in the US economically and financially does not stay in the US,” said economist Mohamed El-Erian, who is also president of Queens’ College, Cambridge.
“The US has been the major driver of global economic growth, the US consumer is a very important engine of economic activity so the world as a whole would suffer if the US were to go into recession.”
Fears of recession have renewed calls for the US Federal Reserve to cut interest rates at its next meeting in September in a bid to boost growth.
Last week, the Fed voted to hold rates in the range of 5.25%-5.5% – the highest for two decades – while other central banks decided to cut them.
Some experts say that was a mistake and that stock markets are likely to remain unsettled as a result.
“Markets are very volatile at the moment and will likely stay volatile until the Fed decision in September, so we wouldn’t rule out rapid swings in both directions,” said Stefan Angrick, a senior economist with Moody’s Analytics.
