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IHS Chief Economist Nariman Behravesh and HS Dent CEO Harry Dent debate the future of the U.S. economy.
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Are we headed for recession or not billionaire Warren Buffett sounding off last night on whether he sees a recession in the US -- future take a listen.
I think is very low us.
I'm also mentioned Europe the Balkans -- that that -- -- big time.
That is Buffett's opinion but let's look at some of the numbers.
Not -- monthly employment is actually up more than 1% over the last year -- the same time the labor participation rate is down year over here.
But there are a whole bunch of other steps that are making this economy looks just slightly better and you heard about them in the Fed's Beige Book today so is the US really going to be able to avoid a recession.
Talk first street fight for the bears we have Harry deaths.
Of HS -- and for the bulls we have now -- bearish chief economist with -- HSR -- and I'll start with you.
No -- -- took this huge list of sinister FaceBook and -- started come out of start during my chicken scratch.
Again total employment -- economic activity expanding auto sales looking stronger price inflation modest you are very bullish in this atmosphere.
But what about Europe what about the negative headwinds that everybody's talking about right now that may hurt us.
I think certainly -- a source of concern but we have to just keep in mind that we're not that exposed to Europe.
Our exports to Europe or two and it roughly two and a half percent GDP compared with consumer spending which is 70% of GDP.
Consumers are fairly bullish.
They're fairly optimistic they're -- -- Their finances and improved over the last year or so.
So -- 70% of the economy right there is holding up reasonably well.
There are other reasons to be cheerful energy prices coming down.
That's a good advice -- taxcut for a lot of households up there are a variety of things that are on the upside as you're saying.
But Europe is a vulnerability but are -- our exposure to Europe.
Is fairly small K Harry I thought I Guernica fought for -- -- at some point during that is a recession coming you that you suggest -- if I'm wrong that there is at least eight.
Contraction of some -- 2013.
Coming correct.
Yeah I mean we have this major crisis only massive stimulus our analysis shows that in Europe.
The United States and even in China now without heavy government stimulus economy just flops over remember QE1.
Big jump in the economy and then a year later it flopped back down to zero now -- in QE2 of course the economy's doing better after this much stimulus.
But it's like a couple coffee it's gonna we're -- have been predicting -- -- -- -- this year.
Job creation GDP everything's already slowing so I think there'll be another QE3 but how many times can you keep stimulating this economy you know jolt and -- jolt until -- -- no.
Baby boomers are done spending we look at the long term I don't care what consumers feel like short term I don't care what consumer sentiment -- that doesn't last.
People spend by age when they're raising their families and when the kids are gone they don't -- even more they don't buy houses consumers are over and debt.
Businesses are over in debt governments are over in debt.
And Spain is gonna break the back of Europe Greece -- coming for a third bailout soon -- coming with many more -- bring out the ball hubs what do you say that that.
What we have to -- careful not to confuse long term trend those short term friends.
We're talking I thought spoke about a recession is -- or even next year.
And so you know let let's just be clear about that while Harry so why hasn't seen that it's gonna be so I'm talking next year 2013 we -- Arafat is not gonna happen.
Let me just say let's take -- consumers' finances let me just finished consumer finances and improved consumer debt as a share after tax in the has fallen in the last three years.
So consumers aren't much better financials.
And they were three years ago.
Are -- putting one of the segment -- one thing we haven't talked about maybe actually let me throw this first and -- and then -- -- so that he can store -- energy for this.
Not an -- what about China we're talking about Europe may be the big deal is not necessarily Europe as bad as Spain isn't everything else -- -- the big problem is if China goes bust there are bubbles there there's not just wondered.
Yeah.
-- great no issue about that but again our exposure -- China is not that great we don't export how much is trying to.
We import a liar -- -- -- -- net buyer bugs.
Yeah they won't keep buying our bonds because they're safe.
I'm out of that they don't have cash that's not quite as chairman if they don't have -- that Zardari debate this but if they don't have the data they -- -- under wraps.
The government has -- one of the positive from China.
If China has the recession -- -- oil prices -- -- -- fifty dollars a barrel all right that parent -- from -- not only was the fine but say come on let's go get that the no -- what happened last time.
United States had a little sub prime crisis.
In the whole world went into recession mostly stock markets went down fifty to suddenly -- on where we are linked more through banks and stock markets.
I agree that our exports are not that linked to China or Europe that is not the problem -- But I guarantee of Europe goes and a deeper prices -- China seize the biggest real estate bubble ever on the planet ever burst and it will burst.
We're going to feel let and other countries can appeal it and gas commodity prices -- gonna go down but that's gonna sink emerging countries the other big part of the world economy so.
You can't think that a part of the major economy can go down and then we're gonna be okay -- we went down and everybody else was not okay -- Arab men have the first word Harry has the last with -- smartest minds -- topic writes I can't imagine having gentlemen please come back and let's do this again.
