Global economic turmoil is prompting General Motors to issue a recession warning as America struggles with the current political and financial uncertainty.
Share prices have fluctuated wildly this week on both Wall Street and in the City of London as investors endure a roller-coaster ride that has seen countless billions added to and wiped off their investments day by day.
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The cautionary note was struck by GM CEO Dan Akerson as he addressed future sales projections in the US and while the American economy continues to remain flat.
Despite sticking to the manufacturer’s forecast of the US market reaching 13.5m vehicles this year, a GM spokesman in Germany confirmed to just-auto comments by Akerson noting the situation was fluid.
“For the time being we [Akerson] we stick to it [forecast], but we rather expect the market to come in at the lower end of that range,” he said.
“I hate recessions but there is indeed a risk of a new recession and I am concerned about that. However, fortunately, our cost structure is such that we can work through difficult times even on a US market of only 11m vehicles – we can still make money.”
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By GlobalDataUS unemployment figures continue to remain stubbornly high, while the recent stand-off between factions with the Congress and President Obama saw the country come within one day of defaulting on its enormous US$14 trillion debt.
And the US gold-plated AAA long-term sovereign credit rating dropped to AA+ following a re-evaluation by Standard & Poors.
A statement from the credit rating agency noted: “The outlook on the long-term rating is negative.
“We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.”
