CRE Holds Tight As S&P Predicts 25% Chance of Another Recession

NEW YORK CITY-Disappointing jobs data and the poor labor market have softened the potential for US economic growth—all factors that could lead to another recession, according to a new report from Standard & Poor’s, “US Economic Forecast: He’s Buying A Stairway To Heaven.” In the study released Friday, the ratings agency expects that US GDP growth will be 2.2% this year and 1.8% in 2013, prediciting a chance of another US recession to be 20% to 25% likely due to domestic and international financial issues.

The report directly followed a Federal Open Market Committee Meeting on Thursday, in which the US Federal Reserve took action to extend its guidance on interest rates, saying that it will keep rates low until mid-2015. Fed chairman Ben Bernanke said that the US central bank would spend $40 billion each month buying mortgage bonds until the economy stabilizes. In addition, the Fed also initiated another round of quantitative easing, which previously involved the purchase of $2 trillion worth of Treasury and mortgage bonds.