US business leader warns of 'double dip' recession

The head of a US business executives group warned Thursday that the world's largest economy could endure a "double dip" recession if efforts by the authorities fail to spur growth.
"If, after the economic stimulus package takes effect and we get into (20)09, and the ... lower interest rates do not kick in, there is a probability of (a) double-dip recession," said Harold McGraw, chairman of Business Roundtable, which represents chief executive officers of leading US companies.

"That could have serious effects on the other developed countries," said McGraw, who is also head of publishing giant McGraw-Hill.

US economic growth has slowed dramatically in recent months and a growing number of economists fear the world's largest economy will experience a recession during the first half of 2008 amid a housing slump and related credit crunch.

There is also growing nervousness that the economy might slip back into recession again after a brief recovery in a W-shaped "double dip recession".

McGraw, who was in Tokyo for a one-day business summit with fellow business leaders from the Group of Eight (G8) richest nations, warned that the credit crunch would continue until the end of this year.

"I think it will take the rest of this year to unwind but I think it US President George W. Bush in February signed a two-year, 168-billion-dollar economic stimulus package to try to boost an ailing American economy.

The Fed has slashed borrowing costs by a cumulative 300 basis points since September last year to ease a credit crunch and boost the economy, and is widely expected to further cut rates this month.

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