Red Double

A Double Dip Recession Is Certainly Feasible

Some economists watch for one of the most optimistic signs, and others look for probably the most negative signs. Economic data from the last few months leads some to think a double dip recession, where the economy falters, starts to recover, then tumbles again before bottoming out, is starting to become a real possibility. European analysts also as Wall Street are thinking it might happen, and the fallout can be just as global.

Second dip claimed possible by Moody’s

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. Moody’s predicts a fall in real estate prices of 20 percent, as outlined by the Wall Street Journal, if a double dip recession does occur. The real estate market should stabilize in 2012, should that happen. The economy will also shrink a further 5 percent, as outlined by Moody’s.

Federal Reserve doesn’t smell roses either

The Federal Reserve isn’t calling for the bubbly to be broken out yet either. According to CNN Money, the Federal Reserve announced after a meeting on Tuesday, August 10, the economy was not recovering as fast as had been hoped and it will take longer than previously estimated for things to return to peak output. The Fed did not address the possibility of a double dip recession, but did announce it would keep the federal funds rate at or near 0 percent and purchase further Treasury securities.

Doom and gloom across the globe

If a double dip recession happens, it will be global in scope. There will be effects of a double dip felt across the Atlantic as well. Fewer goods are being exported for sale, as American trade deficits have widened this year. That is less cash from foreign markets coming in. Coupled with a troubled housing market, these indicate a very slow recovery at best.

Further reading

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

Kryten’s double polaroid – Red Dwarf – BBC comedy