Meredith Whitney: 'Increasing Signs' Of A Possible Double-Dip Recession

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:

Comments

[Melanie Simms]

03:32 PM on 08/04/2011

Double dip recession... thats a joke- it actually suggest we had any major improvements before; you dont have a double dip recession of things had gotten better; we're just afraid to call it what it is; a DEPRESSION!

[Melanie Simms]

08:10 PM on 08/13/2011

Oops - sorry for the typos but tell me, where are we now, just one week later?

[Over Taxed]

11:49 AM on 08/04/2011

Still wondering when we came OUT of the Recession....

[grover5995]

03:18 PM on 08/03/2011

If she's right again, watch out below!

[Scott Zwartz]

02:06 PM on 08/03/2011

"Double Dip" is the code word for DEPRESSION.

We are a nation of such cowards. Admit the truth. We are in day 3 of the Obama - Tea Bagger Depression.

Three times Wall Street bailed out Obama and gave him a clear path to a Up - Down vote to increase the Debt limit with no strings attached. Wall Street had even lined up the GOP votes for him. Obama turned them down demanding that the government SPEND LESS.

I do not defend the crooks on Wall Street, but from my early years of working with street gangs, I know that even thugs realize the need to constraint their more insane members. Wall Street did that -- 3 Times and Obama insisted on bringing on this Depression.

The only reason we do not see more lay offs today is that most businesses thought Obama would not insist on GOP supply side economics (Say's Law). Now that Obama has legally trapped the economy into Say's Law, which always results in a depression.

[jimtodd]

12:58 PM on 08/03/2011

I have doubts about a double dip recession. I believe full blown depression is more likely, since we have eliminated any possibility of stimulating the economy.

[msolare]

11:05 AM on 08/03/2011

Hellooo everyone, wake-up!! We NEVER came out of the "last" recession.

[Scott Zwartz]

02:08 PM on 08/03/2011

Because America is the least educated of the industrialized nations, we believe anything any crook or ignoramus tells us. The nation has just enacted a law that say DOWN is really UP.

Only a fool thinks LESS spending means MORE Jobs.

[MissingAmerica]

10:27 AM on 08/03/2011

So many put down the Social Security recipients and the Unemployed as the cause when, more accurately, the GOP have set their sites on those programs to hope that no one notices that the drain is the Republican party. So much access at our fingertips and so many people either don't understand or just find it easier to sit blindly by. As long as the blame game continues nothing will be done. Surely most of us can read or we wouldn't be posting. When our country is in such dire straits as now, I fail to understand how people can be content to just read right-wing media or look at what happened in the past 72 hours and blame this administration. The debt ceiling pays off the past 10 years of debt. How many know that the pharmaceutical coverage W brilliantly placed is costing billions of dollars and there is no funding for it! It's costing us and we don't even want it! The GOP who designed it left shortly thereafter to head a big pharma company! If we care we must read and find a way to educate. Ignorance and apathy are killing us, and that is what the GOP is hoping for. How about us?

[Elizabeth44]

12:49 PM on 08/03/2011

For those who don't know, the drug benefit in Medicare FORBIDs the Federal Government from negotiating prices. The government has to pay whatever big pharma chooses to charge. We pay the highest drug costs in the world. Just changing that to requiring the Federal Government to negotiate the best possible prices for Medicare, Tricare, and all the other government employee plans would save billions.

[Scott Zwartz]

02:16 PM on 08/03/2011

This entire fiasco rests with Obama. When the school's principal is bullied by a hand full of second graders, the principal's job is to run the school -- not access to every demand of the 8 year old bullies. Yet, Obama caved into the bullies. The Tea Baggers are not a majority of anything.

Even Wall Street opposes the Tea Baggers. Three times Wall Street arranged it so that Obama could have the Debt Ceiling raised with no strings, but 3 times Obama rejected the opportunity and demand that we reduce spending by Trillions of dollars.

It turns out that Obama completely belies in GOP supply economics even though the GOP does not believe in it.

[BCS]

05:21 PM on 08/03/2011

You can't keep on spending more than you take in without having our credit rating destroyed and higher interest rates- possibly MUCH higher.
What do you think skyrocketing would do to the economy?

It's not so simple as spend-spend-spend.

I presume you want more jobs.

If that is the case, why do we allow in over a million new immigrants to compete for non- existing jobs? Do we put them or more American on welfare?

If we want to stop wages from plummeting and we want to bring manufacturing back, why don't we tax foreign goods that could be and used to be produced in the US? This might inspire Americans to open manufacturing plants.
here.

If we are worried about lowering blue collar wages, why don't we enforce immigration laws so that Americans will not have to compete with cheap foreign labor?

The answer, of course, is because the REAL goal is to LOWER American wages so that the super rich can get richer and your precious Democrats as well as the Republicans are in on the plan. No one tells you the TRUTH and they don't have to because you are willing to blame the Tea Party when the Tea Part is the only group that is honest in this whole smelly scenario.

[umkcmoneyman]

09:57 AM on 08/03/2011

Hope and Change!

[David T Tower]

12:08 PM on 08/03/2011

Hope is not a strategy. LOL

[Scott Zwartz]

02:16 PM on 08/03/2011

Not, it was a lie

[Shain Eighmey]

09:56 AM on 08/03/2011

Of course it's going to be a double-dip. We're about to flood the market with even more unemployed workers thanks to our "austerity" measures.

[David T Tower]

12:09 PM on 08/03/2011

Name one.

[Elizabeth44]

12:50 PM on 08/03/2011

Cutting government spending is cutting government jobs. That is what is happening with the state and local entities now.

[Shain Eighmey]

03:12 PM on 08/03/2011

Right now, the FAA. Many other groups are making preparations for layoffs also.

When you make a big cut to government spending that comes from a job that someone does.

[Mike Rock]

09:53 AM on 08/03/2011

Bush/Cheney: Mission Accomplished! Ha ha ha! Can't wait ... Them people who's always cryin' about "rights" and "minimum wage" and such is going to be lined up around the block, willin' to wipe the butts of our servants for a dime. Yee-haw! This is just peachy!

[Understandnu4u]

09:52 AM on 08/03/2011

A double dip is a understatement. I think the economy has already experienced a second recession due to the fact that the calculations are off due to unemployed people giving up on help from the government. Many people have stopped filing for unemployment due to their benefits being exhausted and many have become monetarily ineligible. For the debt ceiling negotiation NOT include the unemployed shows just where the government mind set is...IN THERE OWN POCKETS.

Unemployment rates in many states are between 9.2 and above. In states such as NC, the rates have been 9.7% for several months and NOW the rate shown for NC is currently 9.9%. The Governor Perdue HAS NOT and it does not seem like she cares enough to help put extensions in place to help the citizens of NC who are considered long term unemployed.

The Government officials eat, sleep, and have no worries about money...
The Government officials make promises they never keep, and spend money of the hard earned workers to supply themselves in the end.

When are they ever going to be accountable for their own mistakes which has caused the US to continue spiraling down in a even more deeper recession.

[gravityhunter]

09:47 AM on 08/03/2011

People: In my very humble opinion, if there are many more people working, there is more money being pumped into the economy, then - the domino effect. Do NOT let them be successful in getting you to forget about the jobs bill promised by diverting your attention with other issues...wagging the dog is a real tactic......

[Hijacked]

09:30 AM on 08/03/2011

Republicans are the cancer in the US body politic. There has been nothing but economic disaster after disaster when they had their presidents from Reagan, to Bush I and Bush II. Bill Clinton cleared budget deficits to a surplus of $260 Billion when he left office. Bush, Jr. went to two wars on false grounds and depleted our resources. He and the Republican Congress people saw to it that War Appropriations were hidden from and not to be accounted from the national budget, and therefore US citizens were not mindful that these costs will have to be accounted for one day in the national budget. Obama included those costs into the national budget because they were national expenses and, now, the Republicans point fingers at the current president for increasing the deficits fully knowing that Bush's war expenses are now part of the national deficit. To add to that, Bush's tax cuts for the rich, the lack of any productive economic policies, Wall Street's scams enabled by former GOP Senator Phil Gramm championing investment banks to get into commercial bank business, are among a few GOP led disaster policies that have snow balled into the current economic crisis. But they keep their disinformation machine through Fix News to mislead people incessantly. So long as these types of Republican politicians are elected, we will continue to dig our own grave. Is it a surprise that Prime Minister Putin referred to the US as a parasite in the global economy?

[DredLockRasta]

11:22 AM on 08/03/2011

Spot on. I will jsut add that the gop knows that increasing taxes on the wealthy will benefit the econmy. Reagan raised tasex when unemployment was above 10% and it was follwed by millions of jobs. Clinton raised taxes and it was follwed by a robust econmic outburst that led to a surplus. The gop does not want another democratic president to have that narrative , a surpus under a democratic adminsitration, , , so they are fighting against any economic recovery. How many jobs bills are stuck in Congress? 7 Which party voted against extending the pay roll tax holiday? the gop. Which party hi-jacked this country over the debt ceiling increase.. and look at what it has brought about. The stock market is in free fall. The gop disgusts me to no end.

[grover5995]

03:16 PM on 08/03/2011

Great post! Hope everyone takes the time to read it. Fanned

[fineartgalaxy]

09:30 AM on 08/03/2011

Still, this entire Congress, the WW and the Federal Reserve will always and foremost facilitate recovery in a way that only helps the corporate and financial institutions and never seems to "trickle down" to those working for a living. It really does not matter how many times we are warned, things will not change until we change our mind about our established institutions.

[Dron Burn]

07:11 AM on 08/05/2011

interesting

[budanatr]

09:25 AM on 08/03/2011

Increasing unemployment is the GOP plan and then they blame it on Obama in hopes of getting rid of him in 2012.

Anyone who does not see this is an idiot.

[gts31bumbee]

02:15 PM on 08/03/2011

This plan has backfired on the GOP. They are about to go into a full panic mode as they realize they are on their own TITANIC. Every day the markets sink I lose a little thru my two modest mutual funds and possibly a pension investment. The only thing that cheers me is knowing that these wealthy self centered Repugs. will lose far more than I. They are truly what I call them "O R" Republicans- ostrich republicans, who are about to run amok with their heads up their collected rear ends.

[BCS]

05:32 PM on 08/03/2011

Lower Americans wages is the plan of BOTH major parties.
Both parties are controlled from the top. Open your eyes.