The United States has entered a recession, according to highly-regarded investor Jim Rogers. The guy who co-founded the Quantum Fund with billionaire investor George Soros in the 1970s told that issue at Britain’s Daily Telegraph newspaper on 24 January 2008, switching out of the dollar and into yen, the yuan and the Swiss franc. The similar statement came from Merrill Lynch report at Friday’s employment report, which sent shares tumbling worldwide, confirmed that the US is in the first month of a recession. An official ruling on whether the US is in recession is made by the National Bureau of Economic Research, but this decision may not come for two years. The NBER defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months”. It bases its assessment on final figures on employment, personal income, industrial production and sales activity in the manufacturing and retail sectors. Merrill Lynch said that the figures showing the jobless rate hitting 5% in December were the final piece in that puzzle. “According to our analysis, this isn’t even a forecast any more but is a present day reality,” the report said.
However, Its view is controversial, with banks such as Lehman Brothers disagreeing. NBER president Martin Feldstein also denied Merrill’s claims. But, there were further signs of the housing slowdown that has sparked off the problems in the US economy in home sale figures. Pending sales of existing homes fell 2.6%, according to the National Association of Realtors, which saw its pending sales index drop to 87.6 in November, 19.2% below the point it was at a year ago. The figures were better than expected, however, because October’s index reading was revised upwards from 87.2 to 89.9. Moreover, US phone giant AT&T said it was now disconnecting a growing number of home phone and broadband customers for failing to pay their bills.
Dealing with that issue, Minister Mentor Lee Kuan Yeuw’ comment on this issue was the impact of a possible United States recession on Singapore will not be as great as during the 1998 Asian financial crisis, because India and China’s continued growth. But it will take one to two years for the effect of this buffering factor to show, he added. Mr Lee was speaking to the Singapore media in Riyadh on Tuesday, a day after the global stock market crashed in what the media dubbed as Black Monday. But there are opportunities to be found amid the turmoil, he said.