Economists See Increased Chance Of Double-Dip Recession

Buried amidst the increasingly gloomy economic news of the last few weeks -- which includes stubbornly high unemployment, rising foreclosures and a grim outlook from the Fed, among other factors -- is a growing sense of doom among some prominent economists.

More than a few top economic thinkers have significantly upped the chances of a return to a recession. Today, the noted bear Nouriel Roubini, the cofounder and chairman of Roubini Global Economics and a professor at New York University's Stern School of Business, delivered a grim prognostication via Twitter: "Risk of a double dip recession in advanced economies (US, Japan, Eurozone) has now risen to 40%."

Roubini is not alone in his concern. Last week, David Rosenberg, the Gluskin Sheff economist (formerly of Merrill Lynch), whose words have become must-read barometers of bear-ishness, said that the chances of a double-dip recession in the U.S. are now "higher than 50-50."

Yale's Robert Shiller, one of the nation's preeminent housing experts and the co-creator of the widely watched Case-Shiller Index, also said last week that there's greater than a 50 percent chance of falling into another downturn. The culprit, according to both Rosenberg and Shiller, is, quite simply, jobs. Here's Marketwatch:

Shiller pointed to the nation's stubbornly-high unemployment as a root cause of lingering economic woes. And with the Federal Reserve running out of bullets to fight a second recession, he urged Congress to join the battle and focus on putting people back to work.

"Beyond the Fed, I'd like to see the government take a renewed stimulus package focused on creating jobs [and] on activities that involve a lot of people," Shiller said.

Earlier this month, a paper written by a visiting scholar at the San Francisco Fed put the odds of a second recession in the next next 10 months at "no greater than a coin toss."

Mohamed El-Erian, the CEO of PIMCO, the world's largest bond investor, who the creator of the now ubiquitous phrase "new normal," said earlier this month that the U.S. faces a 25 percent chance of a double dip and deflation.

The dire forecasts are coming even from some of Wall Street's most profitable banks. Last week, Goldman Sachs warned in an email to clients that the chances of another downturn are "25 to 30 percent."

Comments

[shigeru]

05:34 AM on 09/06/2010

Question = when does it stop being a double dip recession and merely the second leg of a depression?

[Wiki Zilla]

09:40 AM on 08/19/2010

Oh, here's the link to the article (Double Dipping Slipping by Coventry League):

http://www.coventryleague.com/3/post/2010/08/double-dipping-slipping.html

[Wiki Zilla]

09:38 AM on 08/19/2010

There's a good complementary article (Double Dipping Slipping by Coventry League) about “W” recovery and includes jokes by Zero Hedge, a song by Merle Hazard, and an economic forecast by ECRI (perfect record, evidently), which incorporates leading indicators.

[osage]

11:22 AM on 08/18/2010

8 OUT OF 10 DEMOCRATS THE COOK REPORT JUST DOWNGRADED ARE BLUE DOG DEMOCRATS!

by John Aravosis

"It seems the Cook Report has just downgrade the election chances of 10 Democrats. Eight of them are conservative Blue Dogs. Adam Green of PCCC thinks he knows why."

"The big lesson of 2010 for Democrats will be that if you govern like a Blue Dog and put corporate contributors ahead of your constituents, you lose. If you listen to what progressives have been telling you all along and stand up to corporations on issues like the public option and Wall Street reform, you win -- especially among Independent voters." -- Adam Green, co-founder of the Progressive Change Campaign Committee (PCCC)

THE LEFT ISN’T THE PROBLEM; THE CORPORATE WING OF THE PARTY IS.

http://www.ourfuture.org/blog-entry/2010083210/gibbs-left-dog-bites-man

"The left isn't the problem; the corporate wing of the party is. The left hasn't gotten in the president's way, for better or worse. It's the corporate right of the party—the Blue Dogs and New Democrats—that have stood in the way."

"The left hasn't been a rebel; it's been too good a soldier."

"The White House has been hurt less because the left is critical, but because the White House isn't listening. The left correctly understood the White House faced a pitched battle over the direction of the country, not a post-racial, pragmatic, bipartisan era of good feelings."

[aDelphinium]

04:23 AM on 08/23/2010

This article is a great find!

Fanned & Faved.

[anticapitalist1983]

01:11 AM on 08/18/2010

This is what it looks like when the banks own both parties.

[BocaMom]

12:49 AM on 08/18/2010

Thanks for nothing President Obama and Congress. After 18 months and at trillion dollars worth of spending, you have only made things worse. 25 million Americans are out of work, losing their life savings, their homes and their businesses. I can't wait to vote all the bums out of office in November.

[lifelonglego]

06:27 PM on 08/28/2010

Did you really think spending trillions of dollars would fix things?

[SiouxSayer]

11:44 PM on 08/17/2010

“We all can tell our stories about this recession and gain strength in the only thing the Corporatists understand....numbers. I need as many recession/unemployment stories as I can get on my new blog started today. PLEASE TWEET and tell others....I want these stories gathered and the MSM made aware that we are amassing. We are learning. And we ARE many! Please go.

www.theincomepoop.wordpress.com

Twitter - @theincomepoop”

[flashblitzen]

02:06 PM on 08/17/2010

Wall Street lives on another planet. Here I think they mean how the Dow went down, then came back up for awhile and now it's looking like it might go down again. This has nothing to do with reality, just charts and numbers that people bet on.

[lizjoycee]

01:48 PM on 08/17/2010

David Rosenberg says the recession may not have ended last year after all:

http://www.wallstmemo.com/news/2010/8/16/rosie-watch-odds-of-double-dip-higher-than-5050.html

[norepinephrined]

12:38 PM on 08/17/2010

tony wise "Everyone knows a massive public works program will work wonders. I dont know that. what I know is funding for loans for small businesses, rather than more funding for already taxpayer funded jobs will work FAR MORE WONDERS. obama agrees. too bad he acts on your policies rather than mine. we see the results as we look around."

The banks are supposed to extend loans, hold them to that responsibility or is the Obama administration going to open itself to accusation that it's trying to really take over the banking business. Any economist worth their degree will tell you honestly that the stimulus funds were too small to provide the needed boost for the economy. Government has the power be a pacemaker, if you will by using it's enormous spending and purchasing power. You know that the banks will not allow the SBA to muscle them out of the tons of profit to be had making small business loans. There is a political advantage to be had here to withhold needed loans for business start-ups or recapitalization and let the economy stall, falter and regress into a depression. Folks are that devious and that cynical. As to another $400 billion solving our woes, why not? We didn't blink about providing the same folks who will not give us business loans over $700 billion dollars from the sweat of our brows. This time spend that $400 billion broadening our tax base by creating jobs and jobs only!

[tony wise]

12:10 PM on 08/17/2010

double dip recession.

obama and biden.

[Kahill]

11:25 AM on 08/17/2010

What does a 40% chance realistically mean? It’s such a cya forecast. Take credit if it does happen, disown it if it doesn’t!

[Quasi Libertarian]

09:47 AM on 08/17/2010

I think we need an "Old-School" Democrat solution to the current problem:

Thank you President John F. Kennedy:

http://www.youtube.com/watch?v=0W3jg0-LOkY

http://www.youtube.com/watch?v=F05q0YMyOxA&feature=related

That is the kind of talk that would make me be a Democrat......

[lismore]

09:46 AM on 08/17/2010

Businesses have focused on bottom line when their top lines are declining. How, they have let workers go.Add to this their attack on the expensiveness of "legacies"-i.e. good pensions is something that will have to be addressed. Translation-reduce pension entitlements! Workers about to retire see reduced pensions so they do not retire; consequence, young workers do not get hired. The amount of distance between what business and investors want (and what bankers and the GOP want) and what Democrats are encouraging has created a great divide. The agendas have been set; VOTE for the agenda that will benefit the masses. The consumer will return when opportunities to earn a living wage do. Airlines, start paying your pilots a living wage; banks, slash your fees and create customer friendly contracts that can be read and understood; ditto that for insurance companies. There are carrots out there for business, but the consumer has the big stick already in place; they are not buying because they are not earning and saving; that requires a secure, living wage not increased access to plastic!

[tw44]

09:39 AM on 08/17/2010

To AndyWright68-you are correct. This recession started way before it was publicaly stated and we have never left the first recession to even double dip into another one. The lies our leaders tell in this country never end!