An impending US economic downturn?

Washington

IT'S economists versus the stock market. Economists generally don't forecast a recession anytime soon. The stock market does - or at least that's one plausible interpretation of its recent roller-coaster behaviour. Who's right? We'll know in a few months. Meanwhile, the dispute highlights the incomplete nature of the present recovery, which has lasted a long time but, to millions of Americans, still feels unsatisfactory.

Economists have long disparaged the stock market's predictive powers. They like to quote the late Paul Samuelson (no relation to this writer), a Nobel Prize winner, who once said that the stock market had forecast nine of the last five recessions - a biting verdict on the market's clairvoyance. It's true that modest stock "corrections" - declines of 5 per cent or 10 per cent - haven't foretold recessions. But that's not true of bear markets, conventionally defined as declines of 20 per cent or more.