A Double Dip Recession May Be Inevitable

[marmar]

from 24/7WallStreet:



A Double Dip Recession May Be Inevitable
Posted: April 27, 2011 at 4:30 am


A potential double dip recession was a large concern a year and a half ago. There was a belief that the deep economic downturn of 2008 and 2009 could not generate enough momentum for an even modest recovery. Then, the unemployment rate started to fall, car sales began to rebound, same-store retail sales improved, corporate earnings moved higher and fuel prices dropped. The comeback was confirmed by a strong holiday sales season last year and fourth quarter GDP rose 3.1%. Unemployment has fallen below 9% much sooner than most economists believed it would.

It has only taken a few weeks, but the chances of a double dip recession have increased. The term is mentioned more often in the media and in speeches by economists. Several large companies have said that their margins and sales may be hurt by inflation.

There are a relative small number of reasons that the economy has begun to slow and most of these have worsened quickly. This 24/7 Wall St. analysis looks at each one, explains how its trajectory and momentum has changed this year, and how it could derail the economic recovery.

1. Wages

Wages fall behind inflation. The Labor Department said that real wages fell in March, the fifth straight monthly dip. Inflation has risen sharply at the same time. Retail prices may not have spiked yet, with the exception of gasoline, but businesses will have to start to pass along the rising costs of their raw materials to their customers. People cannot afford to maintain the lifestyles that they could just six months ago. ..............(more)

The complete piece is at: http://247wallst.com/2011/04/27/a-double-dip-recession-may-be-inevitable/

[Poboy]

1. This cannot be. We are constantly being told there is no inflation, so

there cannot be inflation.

[DCBob]

2. Yes, it is possible if the GOP has their way with their extreme budget slashing proposals..

or if they force us to hit the debt ceiling. If not, then I think we just continue trudging along at slow growth.

[Poboy]

3. .

[Chris_Texas]

4. There will be no recovery without jobs

How can there be?

There will be no jobs without a NEED for those jobs. Businesses, large or small, do not hire unless they need to, nor do they pay more than they have to.

When Clinton signed onto NAFTA and the FTA insanity he was signing the execution of the American worker. From that point on we have been in a steady transition from production to service. And while global service, say computer software for example, is one thing, the majority of our service is to ourselves. I buy your Big Mac's, you shop at my Target, and the wealth syphons away to the overseas countries that make the crap we sell. Some comes back, when they buy the goods and services we still produce, but overall the trend has been massively negative. Many many trillions of dollars have left the country.

What remains is, of course, concentrated into the hands of the very few, largely those who own or have invested in these now global companies. With this disproportionate wealth comes disproportionate power.

One answer you see often suggested is a massive infrastructure initiative. Borrow or print a few trillion and invest it in rebuilding. The problem: those with wealth and power don't much care about most of this infrastructure. They don't manufacture things here anyway, so why should they care? The roads and bridges and airports THEY use are in fine shape. The police and fire are always gonna hurry to attend to them. They have all the healthcare they desire. More, where would the money come from? The rich have already sucked up all the available credit and gifted it to themselves, and the Chinese are not going to pony up a few trillion (which they do not have) to build a potential competetor's country. Only WE do things like that, and we do it because mega-corporations want us to do so (they have the contracts to build, and they benefit from the improved overseas infrastructure, it's just corporate welfare dressed in a robe of compassion).

America's economy has been in free fall since about 1989. That fall has been masked by a series of bubbles and easy credit. Now we have to wake up and pay for the party. This means some serious spending cuts and massive tax increases. NEITHER are stimulative.