Double Dip Recession Appears More Likely
Some economists try to find sunshine and rainbows, others watch for signs of the coming Apocalypse. Recent economic data has given some experts reason to think that a double dip recession, where economic activity plunges, ticks up slightly, then plunges again before stabilizing, is beginning to look more probable. The forecast for doom and gloom is not native to only Wall Street as economists in Europe are starting to think it will happen there also, and also the second tumble will even be global.
Moody’s says second slide could happen
Moody’s Analytics, a research division of credit rating agency Moody’s, has put the odds of a second dip at 25 percent, up from previous estimates of 20 percent. They have predicted real estate prices in a double dip recession will fall another 20 percent, as outlined by the Wall Street Journal. The real estate market should stabilize in 2012, should that happen. Moody’s also contends that the economy will shrink by a further 5 percent in the second dip.
Skies of blue and red roses aren’t in Federal Reserve pictures either
The Federal Reserve doesn’t exactly think wine and roses are within the near future either. The Federal Reserve, according to CNN Money, gave its forecast after an August 10 meeting, and they posited that economic recovery was going to take longer than envisioned, as economic growth was slower than hoped. The Federal Reserve pledged to buy more securities from the Treasury, and to keep the federal funds rate near or at 0 percent, but didn’t broach the topic of a double dip recession.
Nobody escapes from recessions
The recession will continue to be global. Europe will also feel the effects of a double dip recession. The trade deficit is widening, meaning American industries are exporting and selling fewer goods. Having nothing to sell means no money coming in. Coupled with a troubled housing market, these indicate a very slow recovery at best.
Find more information on this subject
Wall Street Journal
blogs.wsj.com/developments/2010/08/11/moodys-odds-of-a-double-dip-increasing-prices-could-fall-20/
CNN
money.cnn.com/2010/08/10/news/economy/fed_decision/index.htm
