Risk Of Double-Dip Recession Is Rising, Says Krugman

[girl gone mad]

Risk Of Double-Dip Recession Is Rising, Says Krugman
http://www.businessinsider.com/henry-blodget-risk-of-double-dip-recession-is-rising-says-krugman-2009-12

Several recent reports suggest that the recovery is faltering. See today's ISM index, for example, as well as the global PMI, continuing jobless claims, and the house-price recovery.

Paul Krugman cites other disappointing news (as well as the ISM) and says that the risk of a double-dip is increasing:

I’ve never been fully committed to the notion that we’re going to have a “double dip” — that the economy will slide back into recession. But it has been clear for a while that it’s a serious possibility, for two reasons.

First, a large part of the growth we’ve had has been driven by the stimulus — but the stimulus has already had its maximum impact on the growth of GDP, will hit its maximum impact on the level of GDP in the middle of next year, and then will begin to fade out. Second, the rise in manufacturing production is to a large extent an inventory bounce — and this, too, will fade out in the quarters ahead.

Two stories this morning highlight the risks.

http://krugman.blogs.nytimes.com/2009/12/01/double-dip-warning/?scp=4&sq=krugman&st=cse">Keep reading at the NYT >

[saracat]

1. This should scare the crap out of everyone.This is yet another reason the WH Econ Team must go.

[roamer65]

2. Only if we have to increase interest rates to fight off a currency crisis.

Austerity measures + interest rate increases to fight off a 2010 currency crisis would definitely bring on a double-dip recession. This is entirely possible next year, with the massive amounts of dollar denominated debt we will be pandering.
Otherwise, I don't think there will be a double-dip. The "recovery" will more than likely be an "L" shaped one much like the Japanese experienced in the 1990's.

[sendero]

3. I find it puzzling.

.... that anyone would characterize our current economic condition as a "recovery".

It is not a recovery. There are temporary noise blips in all economic data, it does not go straight up or down.

We are not in a recovery, so there can be no "double dip". Just one long grinding single dip.

[IrateCitizen]

4. I liken it to a downward staircase.

The kickplate represents each recession/depression, while the tread is the flat "recovery," or in more modern parlance, "green shoots."

Just like the directions on the shampoo bottle, lather-rinse-repeat. There might be a slight uptick on any of those "recovery" plateaus, but they will always fall short of the starting-point of the dropoff, giving an overall downward trend. Of course, the chattering classes will always give their best effort to present those flat periods as "recovery" in order to prevent people from realizing what is REALLY happening.

[sendero]

5. People are so desparate...

... for this mess to be over they are inventing scenarios.

It's not over, it's not going to be over for many years and everyone might as well get used to it.

Or even better, accept it and prepare as best you can.