World Bank Head: I Don't Expect U.S. To Enter Double-Dip Recession

SINGAPORE -- The U.S. economy will likely limp along with slow growth and high unemployment but avoid a recession, World Bank President Robert Zoellick said Tuesday.

Europe's government debt crisis threatens to undermine the confidence of consumers and investors, which would further dampen already weak economic growth, Zoellick said.

"I don't believe the U.S. and the world will go into a double-dip, but there is a high degree of uncertainty," he told reporters in Singapore. "Events in the eurozone can have ripple effects all around the world, not only in terms of financial markets but also confidence, whether it be consumers or businesses."

Zoellick said European countries may need to deepen fiscal integration – implying governments should sacrifice some control over their budgets so spending policies can be coordinated among countries using the euro.

He said recent government bond purchases by the European Central Bank have provided temporary monetary liquidity to markets.

"The policies that have been pursued by the EU up to now can buy time, but parliaments and the public have to come to terms with fundamental questions," Zoellick said. "One direction is to deepen the fiscal union."

Singapore Finance Minister Tharman Shanmugaratnam, who is also chairman of the International Monetary Fund's policy advisory committee, warned that the EU must solve the structural differences of its members rather than simply react to each new crisis.

"We've now reached a critical juncture where further postponement of solutions could lead to the possibility of an outcome that Europe wouldn't like to contemplate, with very large costs to its citizens," Tharman said.

Comments

[Luis Soto]

03:40 AM on 09/14/2011

Sure lol, in the middle ages when those people had the monopoly on banking and were parasatizing the economy with an 86% anual usury, you could just go to their homes and take the money and end up the issue. Same when the tax collector came to parasite the peasant you took the fork... Now their greed is 'science' with numbers so they tell you, the bankers can have unlimited deficit inventing money in derivatives and keeping it for themselves, BUT WE THE PEOPLE can't have credit, must be TAXED and ruined and killed with no welfare... the funny thing is that it works for them,. People are so mentally handicapped that they believed it except in china, which test 110 iq means and so they have nationalized the bankers and grow at 10% because people have credit. But these people have no limit to greed, cheating, their chupzah is infinite and they don't learn from history. Their day will come...
Just stop saying damned lies and statistics some of us are informed
www.economicstruth.com

[floodberg]

05:55 PM on 09/09/2011

"Recession" is calculated so there's no correlation with how well we little people in the trenches are or aren't surviving.

Recession only means having two quarters of decreased Gross Domestic Product (GDP); which has NO CORRELATION with whether we little people can eat or have someplace to sleep.  GDP for the US it's usually done by totaling all the money spent by corporations (including offshore operations charity),  government (including wars, foreign aid, charity) and supposedly what the inconsequential 'little folks' spend as well.  The latter is where the numbers have highly questionable methodologies, eg, they can be magicked.   For details, see the discussion at http://en.wikipedia.org/wiki/Gross_domestic_product#Determining_GDP 

With increasing income disparity and wealth being moved out of the lower classes to the top 2%, that means it can and will still go up despite what's happening for the vast majority of citizens.  It makes the rich folks feel better that their investments and earnings are doing so well, they reward our pols for legislating in their direction, and our government thinks that's a winning system.. 

GDP has been rising for 20 years in the US, while we've gone from employees to contractors to uninsured to unemployed, foreclosed and busted. 

Everyone but rich folks and the very lucky have lost financial power and stability since 1987.

[Timma]

09:54 AM on 09/07/2011

Robert Zoellick may be right - But that means among several things the new norms of higher average unemployment, greater income disparity and a weakened dollar will not be pleasant for most people.

[Peanut Santiago]

04:19 AM on 09/07/2011

What a dumb f--ck!

We are in a recession and entering a depression.
Along with the rest of the world.

I bet this guy doesn't see the euro is imploding either.
It is being propped up (who knows for how long) but the cracks are showing.
Too many member countries are in serious financial trouble.

[jsgaetano]

11:32 PM on 09/06/2011

World Bank approval seems like a kiss of death to me.

[orange county man]

11:20 PM on 09/06/2011

Right, like the last few years haven't proved that bankers don't know their rumps from their elbows.

[tbryant80]

07:25 PM on 09/06/2011

Obviously, he is not the smartest kid in the room

[Jordan Willis]

05:06 PM on 09/06/2011

Ahh, this takes me back to those halcyon days when you could almost believe what a banker was telling you. Sorry, Rob. I don't buy it anymore.

[omnioasis]

03:23 PM on 09/06/2011

These are the same people who said Obama wouldnt print trillions in 2009 and de stabilize our dollar, but he did. the same group 2 years ago said there was nothing to be concerned about in Greece.

[tbryant80]

07:25 PM on 09/06/2011

The Fed did that. They are not a part of the government.

[wsdave]

11:18 PM on 09/06/2011

Did the Fed do that all by themselves?

They can just print as much money as they feel like, without asking anyone?

[halfpricefaustian]

02:32 PM on 09/06/2011

Europe needs to deal with Greece. It has been addressing Greece's liquidity problem with no thought as to it's insolvency. Greece must default and the EU must work to keep the fallout from spreading. They will probably find a way to move the debt from the banks to the taxpayers which is actually worse than letting the banking system take the hit. The global banking system would be just fine with 50% fewer banks and the banks should be forced to eat their investing mistakes.

[tribilin219]

02:21 PM on 09/06/2011

Don't Expect U.S. Double- Dip Recession, Right, Keep telling yourself that.

[Frankling]

06:21 PM on 09/06/2011

He's telling the truth.
It can't be considered a double dip if we never actually came out of the first dip, except by manipulating the statistics.

[tbryant80]

07:26 PM on 09/06/2011

That guy is a cunning linguist

[Hijeetz Mipanz]

01:45 PM on 09/06/2011

Thats because we never came out of the first one.

[Carl Hungus III]

01:40 PM on 09/06/2011

The Eurozone (and later the U.S.) has to restructure its finances so that the debt incurred by the government will be paid off? This burden will fall on all citizens, whether or not they approved of government expenditures. So why not have every piece of the budget voted on by all citizens? If we are all paying for the debt, shouldn't we have a say in which debt we incur? Let those who voted for the debt pay for it.

[eugik]

01:18 PM on 09/06/2011

For Europe:
- either deeper fiscal union, where sovereigns will play the same role as the states in USA,
- OR weaker sovereigns have to leave the Eurozone and devalue.
For US:
- massive stimulus package geared toward employment to improve the infrastructure,
- fixing banking system
- finding a way to have corporations invest domestically
- plus taxing the rich (so they would feel it)
- tax code simplification
- careful deregulation in the areas where small businesses can benefit the most (BIG corporations are NOT people, my friends)
For China:
- soft or not so soft landing

[Artp]

12:53 PM on 09/06/2011

The underlying problem with our economy is that we are consuming resources at an unsustainable rate. We will probably see a continuing rise in prices and deterioration of living standards.

(The author of this comment has a web log on economics at https://economics102.wordpress.com/)