Dr Mark Faber, economist and author of the Boom Doom and Gloom report, says optimism on the prospects for the US economy is misplaced as the world’s biggest economy is already in recession.
Speaking at the Ashburton investment conference in Jersey last week, Faber said the sub-prime crisis and falling house prices have had a massive impact. He said: “I would suggest to you that the US economy is already in recession.”
He pointed to a contraction in the US current account deficit over the past three months as evidence of recession. The US economy’s resilience has been put down to consumer spending but Faber said the contraction is due more to falling volumes of imports into the US than a fall in consumption.
Faber said the fact that the world’s economies have been in a synchronised boom – the first time this has happened in 200 years – could spell trouble.
“The fact we have a synchronised global boom suggests we will have a synchronised global bust which will be rather unpleasant,” he said.
Economist Anatole Kaletsky said big dollar reserves held by emerging economies, including China and Brazil, coupled with demand from India and China, should make up for the fall in US consumption.