CSM: "Economist Mark Zandi: chance of second recession 1 in 4"

[TomCADem]

Mark Zandi has been pretty even keel about his predictions. He is neither preaching the second coming of hyperinflation nor is he preaching a return to the GDP growth of the 1990s. In fact, he predicts that unemployment will actually reach 11 percent before it starts to reverse:

http://www.csmonitor.com/USA/Politics/monitor_breakfast/2009/1229/Economist-Mark-Zandi-chance-of-second-recession-1-in-4

On the economic outlook for 2010:

Economy.com anticipates “real GDP growth of 2 percent in 2010 calendar year and growth of closer to 4 percent in 2011.”

On the unemployment outlook:

“I would be surprised if we don’t get close to 11 percent, primarily because we are at 10 currently with a falling labor force, which is very unusual. So when those people come back into the workforce, and they will have to as they run out of severance unemployment insurance, then labor force growth will resume and 11 percent unemployment seems very plausible.”

On his concern, mentioned before Congress’s Joint Economic Committee, that firms will be too shellshocked to resume hiring:

“The concern grows with each passing month that we don’t see hiring revive. I do think that, with some of the policy efforts that are likely to take place, we will avoid going back into recession.”

On the likelihood of the US falling back into recession:

“The probability of going back into recession is still low. It is about 1 in 4, 1 in 5. But that is too high, and, more important, if we do go back into recession – if all economists are wrong and we do go back into recession – it will be very painful, it will be very difficult to get out of it. So I think it is very important to guard against that.”

On why it would be especially difficult to get out of a second recession:

“ two reasons. One, there won’t be a good policy response. The is at zero and our budget deficit will be ballooning out of control. And second, if we go back into recession, unemployment will surge, and we will probably fall into a deflationary cycle.”

[OHdem10]

1. With these odds, I hope President Obama does not blink.

Yes, Deficits are not good: However, if he permits the Conservadems
and Republicans to "roll him" . During a recession, doing belt
tightening as did Hoover, will push us into a double dip.

Timing is everything.

I am beginning to believe the timing was wrong for HCIR, so
please move cautiously and with a very small knife.

Actually, the truth be told we need more stimulus.

There will be time for deficit reduction. Be sure we are
in real growth and not these rosy scenarios.

[scheming daemons]

2. Alternate headline: 75% chance of no double-dip recession

...

[notesdev]

3. 75% chance of

skittle-shitting unicorns

[fasttense]

4. I think the odds for a double dip are higher than that.

Here's the thing. 1. What has been put into place to create millions and millions of jobs in the US? 2. What has been put into place to prevent banks/Wall Street/insurance corporations from crashing again?

Answer to 1. My answers are NOT based on the failed "free" market economic theory. They are based on the reality that the more money you get into the poor and middle class's hands the more you increase demand and the more economic stimulus you get from it.

Increased minimum wage. The painfully slow improvement in minimum wage has finally taken its course. The last increase on July 24, 2009 was the last of three steps of the Fair Minimum Wage Act of 2007. NO More minimum wage increases from here on out. Some of the improvement in the 2nd Republicon Great Depression that you have been seeing - reducing in numbers of jobs being lost, reduction in short term unemployment, increase in GDP - is due to this increase.

Also, increased unemployment benefits have helped and if continued, will keep helping.

A few tax cuts for the middle class and lump sum payments to vets, SS recipients and others has also helped. But that has stopped.

Shovel ready projects have not helped so much. Here in my rural area, projects that were funded were contracted to out of state firms (they could be out of country too but I didn't check that far). So for all we know the money went to line the pockets of some uber wealthy big shot who hordes the money in savings. The infrastructure projects stimulus certainly DO NOT go to our local economy.

And that's about it folks. No FDR, new deal style jobs programs is in the works or even under consideration. No, massive hiring by private or public firms is planned. With the minor stimulus above, you are not going to create millions and millions of jobs.

Answer to 2. Some attempts in legislation have been made to hold corporations accountable. NONE have passed into law, nothing aside from handing out wealth to the wealthy (through banks/Wall Street/insurance corporation bailouts). The US today is probably in a much better position to crash again. Toxic assets are still magically counted as assets, no new loans are being made, federal deficit is higher, CEOs are More arrogant than before the crash and Goldman Sachs has fully inserted itself into President Obamas a**, I mean economic team.