Gates Predicts `Significant Recession,' More Job Loss

Gates Predicts `Significant Recession,' More Job Loss (Update1)

By John Lauerman

Oct. 13 (Bloomberg) -- Microsoft Corp. founder Bill Gates III said that the U.S. economy is headed for a ``fairly significant recession,'' and that the unemployment rate may peak at more than 9 percent.

Higher personal and governmental debt are contributing to the U.S. economic slowdown, Gates said in comments at Harvard Business School in Boston today.

The danger of debt was hidden because until recently there were few defaults and other signs that the economy has been in trouble, he said. The perception of a strong economy encouraged many people to have unrealistic expectations of high, stable market returns, he said.

``That encourages people to get leveraged and take risks,'' he said. ``The danger of leverage is pretty incredible.''

The U.S. unemployment rate climbed to 6.1 percent in August and stayed at that level in September.