Can the US avoid recession?

There is no doubt that America's current account deficit of c6.5% needs to be reduced to a more sustainable level of around 2%. But will the process plunge the US into a recession?

As we continue to look ahead to 2008 one of the key uncertainties facing the global economy remains the massive structural imbalance that exists between the US (and to a lesser but still significant extent, the UK) and the surplus nations of Asia and elsewhere.

We have long wondered when this profound imbalance might be addressed and whilst we are not certain that, in a year in which the Chinese host the Olympic Games for the first time, the adjustment will take place next year, the pressures for change are growing.

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