Economist says U.S. recession unlikely

NEW YORK (Reuters) - The United States faces only a 25 percent chance of sliding into a recession, Milton Ezrati, senior economist at investment manager Lord Abbett, said on Tuesday.

"Subprime (mortgage crisis) in and of itself is not enough to cause recession," Ezrati said at the Reuters Investment Outlook Summit in New York.

"If it engenders a general fear of taking on credit risk, as it has recently, and engenders a general fear about lending and extension of any kind of loan, then I think that could create a recession," the economist said. But he emphasized that he does not consider that a likely scenario.

Ezrati said that while the commercial paper market has been affected by the credit crunch, commercial and industrial lending by banks has soared.

"What that says to me is that the banks are filling in the gap and the Fed is providing them the liquidity to do so," he said.

Ezrati said recent growth in U.S. nonfarm payrolls as reported by the Labor Department have been viewed by the financial markets as sufficient to maintain household income and consumption.

But he said the unemployment rate, currently 4.7 percent, could move higher as more people seek work to argument incomes in a slowing economy.

Lord Abbett & Co LLC, based in Jersey City, New Jersey, manages $116 billion in assets.

(For summit blog: summitnotebook.reuters.com/)  Continued...