Double-Dip Recession: It Can't Happen...But It's Happening
It was just as recently as a year ago that the authorities in politics, business and academe were stating boldly and confidently that the nation's economy was on the mend, and that there was no chance of a backslide into recession again.
Take Lakshman Achuthan and Anirvan Banerji who are, respectively, co-founder and chief operating officer and co-founder and chief research officer of ECRI, the Economic Cycle Research Institute.
"The good news is that the much-feared double-dip recession is not going to happen," they said on CNN on Oct. 28, last year. "After completing an exhaustive review of key drivers of the business cycle, ranging from credit to inventories and measures of labor market conditions, we can forecast with confidence that the economy will avoid a double dip."
"We will not have a double-dip recession at all," said Warren Buffett, the multi-billionaire investor called, by his fans, the Oracle of Omaha, back on September 13, 2010. "I see business coming back almost across the board," he told an assembled group of bankers.
And of course, there was Ben Bernanke, the chairman of the Federal Reserve, who actually acts on his presumed wisdom, saying, on June 8, 2010, ""There seems to be a good bit of momentum in consumer spending and investment," he said at the time. "My best guess is we'll have a continued recovery [but] it won't feel terrific."
Even a Vistage Survey of CEOs, conducted release last Oct. 4, showed the confidence index respondents, all top executives at public companies, saying there was "no evidence" for a double dip back into recession in the nation's economic future.
So much for expert opinion.
This week we have seen new unemployment claims top 400,000 for the eighth week in a row, as the official unemployment rate (about half the actual rate) rose to 9.1%. The latest figure for job creation, 54,000 for May, is just half of the rate needed to keep up with the growth in the number of working-age Americans. Manufacturing has fallen to where it was in 2009, the respected Case-Shiller Housing Index has declared that the housing price collapse has gone into a second dip, with home prices nationwide now back down to where they were in 1999 and still falling, and consumer confidence, according to the Conference Board, is down to 60.8 (in 1988 it was at 100, and 90 is considered "normal"), a serious slump in a nation where 72 percent of the economy consists normally of consumer spending.
Okay, we're not in a second round of recession yet, but with economic "growth" slumping into to 1.8 percent for the first quarter of this year, and nothing up ahead to suggest it will get better, there's every reason to think we could move into negative territory before long.