Economist says 65% chance of recession in 2015

A LEADING US economist who predicted the 2007 global financial crisis is warning there is a 65% chance of  a recession by the end of 2015.

Economist David Levy argues instability in emerging markets will sink the U.S. economy, despite recent data showing it is beginning to bounce back.

Levy says it could be a case of the US getting sick from the flu spreading throughout the rest of the world.

Fortune magazine writes that  European economies are still battling depression-era levels of unemployment and the threat of deflation.

Emerging economies, like China, are having trouble maintaining the kind of growth they have become accustomed to in recent years.

The most recent readings out of China have the world's second-largest economy growing at roughly 7.5% per year, down from the 10% growth it averaged for two decades before its economy began to slow in 2012.

Optimists hope that an accelerating U.S. economy will have what it takes to drag the rest of the world out of the doldrums.

But Mr Levy, the chairman of the Jerome Levy Forecasting Center, argues that the problems of the rest of the world will end up taking the U.S. down, rather than the other way around.

He says emerging markets have continued to invest in an export infrastructure to sell goods to the West that it no longer has the capacity to buy.

The following chart, provided by Levy, shows the accumulation of private debt in the U.S. and in China.

LISTEN TO WHAT HE SAYS ON BLOOMBERG RADIO

 



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