Another Recession Likely Just Ahead: Yale Economist

While most economists look for signs the United State is climbing out of bad times, Yale University Professor Robert Shiller claims chances are "substantial" that the country is heading right back into another recession.

Economist and author Shiller points to a weak U.S. housing market and a murky global economy, and he claims the country is at a "tipping point," at the edge of "a fresh economic contraction."

Shiller isn't impressed with economic models that suggest the economy is on the path to recovery. He claims we're in "uncharted territory," and that makes models shakier, maybe even invalid, simply because there are so many unknowns.

Shiller told The Wall Street Journal last week, "Forecasting models would say no" on the question of whether the U.S. will face a double-dip. But Im seeing signs that encourage me to worry about that."

Shiller, one of the architects of the S&P Case-Shiller home-price index, says the housing market may see a pickup this summer, but warns the long-term path the sector is taking is not encouraging. U.S. housing prices, he says, could decline another 10 to 25 percent over the next five years.

He says, for the hundreds of billions of dollars the Fed poured into the economy to spur growth, interest rates remain at near zero. People are unwilling to spend. Also, Greece is teetering, and if that economy goes down, it will take Europe and the U.S. on a "wild ride."

"There might be a turnaround if psychology changes," Shiller says, but "I fear that it may just continue down. ...

"Theres no precedent for this statistically, so no way to predict," he told Bloomberg recently. "It just doesnt look good."

See the full Moneynews.com story on Shiller's remarks.
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