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Decision based on trends that have halted earlier economic slow-downs 

An economist and professor at the University of California at Berkeley says the likelihood of a national economic recession is 50 percent and possibly even 70 percent. 

Professor Kenneth T. Rosen, who is a professor at UC Berkeley's Haas School of Business, said in a paper released this week that he based his decision on current economic trends that he says have precluded recessions in 1974, 1980 and 1991. 

He said the convergence of indicators such as high oil prices, a tight labor market, a spike in private sector debt and an over-valued stock market all lead him to believe that the U.S. economy could be headed for a major slump. 

In a paper titled Recession Risk Rising, which Rosen coauthored, he said, “Seldom have so many danger signals converged at the same time.  

We believe that federal economic policymakers, investors and the public at large should be paying close attention to the situation and making relevant decisions accordingly.” 

A recent weakening in demand for commercial real estate, Rosen said, could prove to be beneficial to the sector by providing a soft landing in the event of a recession. 

Rosen, who is also the chairman of Lend Lease Real Estate Investments, said last week’s interest rate cut by the Federal Reserve System was a step in the right direction to alleviate pressure on the economy.  

But, he stressed, other more aggressive policy action will be necessary to fully combat the risk of recession.