The question of "When?" certain factors move, and produce their basic macroeconomic effects, is a guessing game of months and sometimes even a couple of years, but I'd say Krugman has the fundamental points roughly correct. Whether it turns into a large enough fall to cause recession, I don't know, but it's abundantly clear that it is causing a fall. Our solid 3.5% Q4 growth was, as you know, revised to only a bit over 2%. This is anemic for an economy that should be turning in 3-4% annual rates. And the economy's average growth rate has been quite weak -- nearly a full percentage point lower than the Clinton years -- over the cycle.
My prediction, as you know, was for a recession in late-'06 or early-'07, if I remember correctly. It looks like mid- to late-'07 would be the smart bet, if people are going to bet on recession.
So far, the only thing Krugman has been wrong about is the recession, but one must stress the So far... in that. Housing busts tend to be nasty. Oil prices could well rise this summer, especially as Hurricane Season gets moving. So we are, by no stretch of the imagination, out of the woods. Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
the only think about the time span comments on Krugman is that you've can't cut him too much slack on timing. I mean, there is going to be a recession sometime. so if he keeps saying it, he's eventually going to be right.
