Towards a mild recession

Here is what a JPMorgan economist said about the current economic situation:

For a number of months now, clouds have been gathering over the global
economy as the interaction of credit turmoil, housing weakness, and rising energy
prices has weighed on growth and sentiment. The recent slide in consumer
confidence across the major economies has been particularly notable: this
week, the US Conference Board measure of household expectations fell to its
lowest level since December 1973. However, the slowdown in overall economic
activity has remained modest. Global GDP expanded at a trend-like pace
of 2.7%q/q, saar in 4Q07 and is currently tracking a 1.7% gain this quarter.
Even the US economy—which is at the locus of downward momentum—looks
to be eking out a small positive GDP gain this quarter. The continued resilience
of the global economy reflects the fundamental health of the nonfinancial
corporates across the globe. Where drags on growth are external—as is the case
for the Emerging Market economies—job creation and corporate spending have
been sufficient to keep demand engines running in the face of softening export
growth. In the industrial world, drags concentrated in the consumer and housing
sectors have hurt aggregate performance but have not been sufficient to
produce the broad-based adjustment in spending and hiring plans by firms that
is characteristic of recession.

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