Predicting the present?

6 March 2007 By Martin Hutchinson

The former Fed Chairman said there is a one third chance of recession, perhaps by yearend. Yet Tuesday s figures show further weakening from a poor fourth quarter. With inflation stymieing rate cuts, are we already in recession?

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Productivity growth for the fourth quarter of 2006 was revised down from 3% to 1.4%, in line with revised Gross Domestic Product figures. Unit labour costs were revised upwards from 1.9% to an annual rate of 6.6% for the quarter.

Factory orders fell 5.6% in January, the largest fall since 2000. Core capital goods orders fell 6.3% and nondurable goods orders fell 2%.

The Institute of Supply Management's nonmanufacturing index dropped from 59 to 54.3 in February.

In a Bloomberg interview, former Federal Reserve Chairman Alan Greenspan said there's a one third probability of a recession, noting we are in the sixth year of a recovery; imbalances can emerge as a result and it is possible that we can have a recession at the end of this year.

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