Chances the United States will lapse into another recession rose over the past month to nearly one in three as the economy faces a number of road blocks that could derail already weak growth, a Reuters poll showed on Wednesday.
The consensus among economists for the probability of another U.S. recession in the next 12 months rose to 31 percent from 25 percent in the August Reuters poll.
The last time economists predicted a similar chance of recession was four years ago, in September 2007. One year later, investment bank Lehman Brothers collapsed and Western economies plunged into the Great Recession.
The economy is dangerously close to stall-speed. There is no buffer, and even a moderate shock could derail the cycle, said Aneta Markowska, economist with Societe Generale.
The poll of more than 70 economists found respondents had slashed their growth forecasts from just a month ago, although the rate of growth was still expected to tick up in the second half of the year after a dismal first half.
The economy grew at an annualized rate of just 1.0 percent in the second quarter and experts see it improving modestly for the rest of the year, with somewhat stronger growth in 2012.
Economists forecast gross domestic product growing at an annualized 1.9 percent in the third quarter, lower than the 2.3 percent that was seen in the last poll. They slashed expectations for Q4 to 2.0 percent from 2.6 percent.
That suggests a recovery that is crawling along, but still vulnerable to jolts.
The escalating debt crisis in the euro zone is one of the biggest risks to the economy. Politicians have come under intense fire to do more to stop Greece from defaulting on its sovereign debt and lead the currency bloc out of the crisis.
U.S. President Barack Obama joined the fray on Tuesday, telling Spanish journalists that euro zone leaders needed to show markets they were taking responsibility for the debt crisis.
A Greek default could have domino effects for larger countries such as Spain and Italy.
Domestically, the world's biggest economy faces high unemployment, frail consumer confidence and jittery financial markets.
2012 is expected to start off with 2.0 percent growth, before rising to 2.5 percent by the second half of the year. There is also some optimism that a new jobs bill from President Obama could help the economy regain momentum.
The Obama jobs plan has the potential to increase 2012 growth to the 3.4 percent to 3.7 percent range, if passed as is, said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott.
However, there is uncertainty over the ultimate outcome, with Obama and the Republicans now fighting their third major budget battle of the year.
Confidence in lawmakers' handling of the economy was eroded by an acrimonious debate in the summer over raising the debt ceiling, which led to a downgrade of the United States' credit rating by Standard & Poor's.
Economists also nudged up their expectations for consumer prices. The consumer price index was seen averaging 3.5 percent in the third quarter, up from 3.3 percent earlier, and 3.2 percent in the final quarter, up from 3.1 percent.
The consensus for core inflation -- which strips out volatile items like food and gasoline, and is more closely watched by the Federal Reserve -- was also revised up a hair.
Expectations for third-quarter core CPI was lifted to 1.8 percent from 1.7 percent, and the fourth quarter was raised to 2.1 percent from 1.9 percent.
The U.S. Federal Reserve was seen keeping interest rates near zero through 2012 after the central bank said last month it expected to hold rates steady for at least the next two years.
(Polling by Namrata Anchan, Somya Gupta and Sumanta Dey; Editing by Ross Finley and Catherine Evans)