LONDON The developed world's economies have become ensnared in a growth slowdown that threatens to turn into recession, at a time when room for manoeuvre with bold policy responses has narrowed significantly, Reuters polls showed.
Surveys of more than 250 economists in North America, across Europe and Japan portend steadily increasing chances that central bankers will need to fire any weapons they may have left to stave off disaster.
The median probability of a second recession in the United States, euro zone and Britain has climbed to roughly one in three, which is dangerously close to where such predictions have been correct in the past.
Consensus forecasts for recessions rarely get to 50 percent before history proves economies were already in one.
"The (U.S.) economy is dangerously close to stall-speed," said Aneta Markowska, economist for Societe Generale. "There is no buffer, and even a moderate shock could derail the cycle."
While several prominent economists have already stuck out their necks with recession calls, those who work in the financial industry appear reluctant to put minus signs in front of economic forecasts.
That said, top global central bankers on Monday said there was no sign of a worldwide recession looming, even though growth is slowing.
Perhaps most striking over the past several months is the change in the policy outlook as financial markets plunged into turmoil and worries about the future of the European common currency have flared from slow burn into a continental inferno.
"European sovereigns now constitute the biggest macro risk," said John Lonski, economist at Moody's Capital Markets.
Economists as a group expect no interest rate rises from either the U.S. Federal Reserve, the European Central Bank, the Bank of England or the Bank of Japan until 2013, which most would agree is too far ahead in an uncertain future to forecast with any degree of accuracy.
This is bad news for the ECB, which has already looked out of step with other central banks for raising interest rates twice this year -- albeit in tiny amounts -- while a debt crisis burned in several euro zone countries.
Indeed, a handful of economists are now on the record forecasting the ECB will cut rates before the year ends.
"We are in an environment where ... unexpected outcomes have become more probable, which has increased the probability that central banks will provide more easing," said Divyang Shah, economist at IFR Markets, a Thomson Reuters company.
"You have seen that debate shift at the Fed, you've seen that debate shift at the Bank of England, and we have seen that debate shift at the ECB, who at their last meeting focused more on the downside risks to growth as well as the adjustments to the inflation outlook," said Shah.
As for economic growth, forecasters took a hatchet to the at-best modest expectations they had pencilled in for the remainder of this year and 2012.
But only five of around 200 respondents to the poll had a quarter of contraction anywhere in their forecast horizon for the United States, euro zone or Britain.
Not a single economist predicted so much as one quarter of contraction in GDP anywhere in the forecast horizon for the United States. The lowest forecast was for no growth.
That is all the more striking given the growing sense of urgency to address faltering growth, and the tens of thousands of job cuts at the same financial institutions who are forecasting recovery.
President Barack Obama has proposed another $447 billion worth of stimulus for the moribund U.S. jobs market.
Although the number of Americans living in poverty hit a record 46 million in 2010, and jobless claims are still on the rise, some untapped economic potential lies in the huge cash piles that large U.S. corporations are sitting on.
In Britain, the chances that the Bank of England will again turn to quantitative easing to boost a stagnating economy are on the rise at 40 percent, the poll showed.
And in Japan, which in all likelihood rebounded strongly from recession in the current quarter, the consensus shows that rebound tailing off rather rapidly as the year ends.
The strong yen, which hit a record high against the dollar last month on safe-haven flows, has sapped the vigour of Japan's recovery from the devastating earthquake and tsunami that struck just over six months ago.
(Polling led by Shaloo Shrivastava in Bangalore; Additional reporting by Andy Bruce and Jonathan Cable in London, Leah Schnurr in New York, Kaori Kaneko in Tokyo; Editing by Catherine Evans)