The debt ceiling debate has finally came to a close on Tuesday. Fears of the United States falling back into recession, however, are only heating up.
Meredith Whitney, founder and CEO of Meredith Whitney Advisory Group, told CNBC yesterday that the U.S. economy is sliding ever closer to dipping back into recession. The analyst, who famously predicted Citigroup's problems and now claims there will be 50 to 100 municipal defaults this year, says the economic landscape in the last weeks has become increasingly dire.
For months, fears of a stagnant recovery have surrounded dismal job creation and dropping housing prices. Of late, layoffs in the financial industry, low consumer spending and poor GDP growth have all led to an increased chance that the U.S. economy will again dip into recession, according to Whitney.
"I think you're getting increasing signs that we're at a risk for a double dip," Whitney told CNBC. "Our GDP number on Friday was an indication that states and local governments, which make up 12 percent of GDP, are really pulling back. We're certainly at a double dip of housing. That puts enormous pressure on the economy."
As for her prediction of mass numbers of municipal defaults, Whitney cited struggling Jefferson County, Alabama and the recently bankrupt Central Falls, Rhode Island as proof of a brewing crisis. "It's playing out how I thought it would," Whitney said.
Watch Whitney's segment on CNBC here: