Paul Krugman: 50 Percent Chance Global Economy Will Enter Recession
Even though Obama's jobs plan is "bolder and better" than Paul Krugman expected, the Nobel-Prize winning economist still told Bloomberg Television on Friday that it might not be enough to stave off global recession.
The risk of global recession is "quite high, maybe 50 percent," Krugman told Bloomberg. He added: "The risk of something that feels like a recession is much higher than that. My central belief is that we're likely to have higher unemployment a year from now than we do today."
Krugman said that while Obama's plan "could make a noticeable difference to the economy," Republican opposition to the President's proposal, on top of the euro zone crisis, still makes recession a substantial possibility.
Speculation over the possibility of the U.S. entering back into recession, and likely bringing the global economy with it, has been a topic of frequent discussion among economists. While World Bank President Robert Zoellick, along with a recent poll of economists, said that a recession is unlikely, others are less optimistic.
Michael Spence, another Nobel Prize-winning economist, also recently pegged the chances of a global recession at 50 percent. Likewise, President of Federal Reserve Bank Charles Evans in a recent speech was of a similar mind that, even if the economy's not technically in a recession already, high unemployment makes it feel that way.
Nevertheless, Krugman's opinion on how Republicans will receive Obama's plan remains consistent between the two.
"The chance that it's not going to actually be enacted by Republicans is 100 percent, I think nothing will pass," Krugman said. "I believe if Obama proposed that we honor motherhood, Republicans would vote it down."
Watch Bloomberg Television's interview with economist Paul Krugman here.