Your Take 

Your Take: Double Dip Recession?

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The Your Take question two weeks ago asked whether or not the Recession was over and the overwhelming opinion was that it wasn’t. With double digit unemployment and housing still underwater, it didn’t matter what economists said… we were still in a bad spot. So it might seem a little silly to ask if a double-dip is on the horizon when so many of us are still fighting to get out of the first dip.

It’s still an important question because regardless of where you personally are, in the dip, recovered a little, or recovered completely; the prospects of a second dip is really scary. Regardless of how you’ve weathered the first dip, a second dip will drag us all down and force us to battle through what many of have been fighting for the last year or two. If a boxer can take that first good punch, great… but few can take two good punches and still soldier on.

So, the question remains – will we have a double dip recession? The experts seem to change their opinion with each economic report and I’m of the mind that we will avoid a double dip as long as we have the fortitude to act. Despite what you think about the TARP and all the other various rescue packages, I think they softened our fall and quickened our recovery.

As an aside, as much as people may hate bankers, we didn’t vilify them when they helped fuel an economic boom. We didn’t complain when things were going too well for our own good… so it’s hypocritical to lambaste them now. If someone gives you a brand new Maserati and you crash it, you can’t blame them for giving you the keys.

I think it’s more likely that we float around in this holding pattern of malaise for a while, even for a few years, without seeing an actual fall. Hopefully we don’t have a Lost Decade like Japan but we’ll probably have a Lost Year or two.

What do you think?

{ 17 comments, please add your thoughts now! }

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17 Responses to “Your Take: Double Dip Recession?”

  1. zapeta says:

    I agree, I don’t think we will dip in to a second recession. That said, it seems like the economy won’t have much direction for the next couple years.

  2. billsnider says:

    I was watching Maria Bartoloma (spelling?) on TV this morning. She said that economist are calling a 10% unemployment rate the “new normal”. Our growth rate is less than 2% for the forseeable future. This means that companies will not be hiring even though they have the cash to do so. Companies also see significant increases in health care, pension and social security/medicare taxes looming on the horizon.

    She also said that the economy continues to shift from manufacturing to service and government. This is not a growth scenario.

    So, will there be a double dip recession. I think in the long term view this question is irrelevant. The question is how do we create more private sector jobs to get out of this long term malaise?

    Bill Snider

  3. Shirley says:

    I think the original downturn in the economy was a very unwelcome smack on the back of the head to many who thought they were in close-to-infallible positions. Those that are now aware of the possibilities of great fluctuation in their financial situations are taking strides to become more stable.

    I really doubt that we will have a double dip but if we do, hopefully many will be better prepared by what they learned (and are yet learning) in the first go-around… keep than chin covered.

  4. DIY Investor says:

    I don’t think we’ll see a double dip. The economy is improving, albeit slowly. The key is getting banks to lend. When they do it’ll happen fast and all this “new normal” talk will disappear.
    Banks don’t make a lot by holding excess reserves. Their opportunities for profit will mushroom. Borrowing for 0% from the Fed and lending out at 6-7% is an enormous opportunity.
    Sitting around focusing on how bad things are will just result in missed opportunities. I saw it in the 80s when the focus was on the S&L crisis and how much it was costing and whether we would pull out of it.

  5. nickel says:

    I don’t think we’ll see a double dip. Rather, it will just be a long recovery.

  6. Piggy bank says:

    The “double dip” will depend on consumers. The unemployment rate is high, much too high, however there is money out there. Consumers are doing what they need to do by getting out of debt. Especially credit card debt. Taking that extra cash out of the marketplace hurts businesses and raises the unemployment rate. However there are a lot of individuals out there who are “hoarding” cash. Fear is keeping them from spending (spending money they have, using cash or debit cards not credit) “hoarding” this money is keeping the economy down. So the easy answer would be for all of those individuals to spend. The problem is America is plagued with the “keeping up with the Jones’s” epidemic. So when individuals with cash start spending those without need to continue to get out of debt and not get sucked into that epidemic.

  7. freeby50 says:

    I don’t think we’re in a double dip or heading to one. Generally the economy has been gradually improving in most every measure. The economy is still fairly weak though and it make take a long time to get back to solid growth / low unemployment.

  8. KP says:

    I’m hopeful that we will not see a double dip recession. I agree with you that the actions the government took softened the chance for a complete economic free fall. However, unemployment and housing are still areas of concern.

  9. I agree Jim…my take used to be that we are going to have a double dip…but as time has gone on, I feel like we’re going to be in a pretty wide ranging holding pattern that fluctuates with all the economic reports and company earnings, some of which are bound to be positive, and others which will be negative…I don’t think there’s enough momentum to move up or down meaningfully over the coming months and year.

  10. Eve says:

    I don’t think any one knows at this point. It is all speculation. Each one of us is experiencing some effect of this economic downturn depending on individual circumstances. Took us a while to get here, and will take a while to get out. What it is called is irrelevant except to the media pundits who like to keep us feeling like we are either about to fall off the cliff, or ??? Whatever sells…Can not get any reality. It is all “jello”.

  11. Yana says:

    I do believe there will be a double-dip recession. I don’t see the economy getting better. There may well be small gains, but things are moving downward. I think we’ll know what the bottom was when we start moving up for a minimum of 9 months. It should be more clear when things are moving in a significantly different direction.

  12. Yes, I agree. In fact, I wouldn’t be surprised if we are already in a double dip. In my office we are unfortunately we are seeing more people filing bankruptcy and going into foreclosure than even a year ago. I don’t think the worst of the housing market has hit us, given that the tax credit recently expired and more tax breaks will expire in 2011.

  13. otipoby says:

    I am usually not a pessimist, but I do think the US will slide back into a recession in the next year or two. I hypothesize that the driving force will be inflation without growth (“stagflation”). Yes, I know that inflation is ridiculously low, and has been for a while. But that is actually my point. The Fed has pumped 1+trillion into the economy with no noticable impact so far. That is just not natural. Or, should I say it is just as natural as housing prices increasing by 10% a year for a decade. We saw how that turned out. I hope I am wrong, but I believe inflation will spike in a year or so. BTW, gold prices repeatedly hit “all-time highs”. I think other investors are hedging for the future jump.

    That reminds me, maybe I should look at refinance rates.

  14. We may get a bull market, but long term our country is in deep trouble. The fundamentals were not changed by TARP or any of chicanery that the government engaged in.

  15. nectarios lafharis says:

    I think that this recession is a never resolved recession now they’re having battles of the currencies and that’s what’s going to cause a depression

  16. Nicole says:

    I agree that we haven’t really gotten out of the first dip yet. In fact, at this point things seem harder than ever, for me and for people I know… and honestly if it gets even worse things are going to be REALLY hard.

  17. Gates VP says:

    @Jim: Hopefully we don’t have a Lost Decade like Japan but we’ll probably have a Lost Year or two.

    You mean like the last 12 years where the markets failed to beat inflation and house prices rose faster than 20-somethings could afford them? Oh yeah and we have a whole bunch of students now graduating with record levels of debt into an economy with too many out of work people?

    Look, the students graduating today with $80k loans basically are a lost generation. They’re not going to reasonably afford a home until well into their thirties (very different from prev generation).

    From your post a while back: it’ll be quite some time before we return to the happy days of three or four years ago.

    It will be a generation before we see that again. In fact I really hope it will be a generation, those days were completely unsustainable.

    We are living in “the new normal” and I’ve been saying this since 2008. We have this unemployment level because we don’t have enough educated, because we pissed away a generation of being the richest country in the world with the 25th (ish) best education system.

    The average American worker has not really earned the right to live significantly richer than peers in other countries. We’re going to see continued 10%+ unemployment, b/c we probably have that many people who are earnestly not employable when compared on an international scale.

    It sucks, I know, it really does.

    But do you want to be the one to tell the Chinese factory worker that they don’t have the right to compete with us because they’re Chinese? Do you want to tell the Chinese genius, that despite creating modern miracles she is allowed to partake of the US quality of life?

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