General Question

weeveeship's avatar

Are we in a double dip recession here in the US?

Asked by weeveeship (4610points) September 10th, 2010

Common arguments I have heard on both sides:

Yes (Bearish):
Unemployment is high
Consumer confidence is dropping
Debt problems in municipalities

No (Bullish):
Record earnings
Worst is over, only way for the market to go is up
Unemployment is stabilizing—>“New Normal”

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15 Answers

ETpro's avatar

No. The economy is still growing, just not very rapidly. The technical definition of a recession is two straight quarters of GDP shrinkage. The latest numbers on GDP growth, jobs and trade ballance are actually better than had been expected. We did much better in exports and cut imports more than had been predicted.

Of course, if you are one of the millions who lost their job in the downturn of 2007–2010 and you haven’t been able to land decent work since, it sure won’t feel like a recovery to you. We need something like the microelectronics breakthrough to really put our manufacturing base and hogh-paying jobs back in high gear. A breakthrough in clean, renewable energy that can be beat fossil fuel in cost would do the trick. The last thing we want to do is stop investing and somehow think that porsperity will come to us as long as we do nothing to help it.

CaptainHarley's avatar

No. It’s still the same one, just worse! : (

cockswain's avatar

Definitely not in one for the reasons @ETpro defined, but possible we could hit one in the future. How likely that is isn’t clear right now.

ETpro's avatar

@CaptainHarley Come on. At the end of 2008, we were loosing almost 800,000 jobs a month. We have now had 7 straight months of job growth. At the end of 2008, the stock market crashed, eventually loosing nearly 50% of its value. It’s back above $10,000 again. The GDP began to plummet in 2008 and fell for 5 straight quarters. It has now shown 4 straight quarters of growth

If you’re one of those who haven’t yet been touched by the recovery, I realize all that sounds awfully academic. But to deny facts and throw out what has brought the improvement in favor of the very policies that caused the crash to begin with would be sheer lunacy. The definition of insanity. Doing the same thing over and over and constantly expecting a different result..

jerv's avatar

@ETpro The state of the economy is rather moot if you are not a part of it; too broke to spend and too unemployed to contribute.
It seems that the real breakthrough is huge bonuses so that companies can increase their overhead costs on paper and thus have less profit to move to offshore accounts come tax time. I mean, when you reduce head count in teh trenches, that means more money for the people at the top and for the stock holders and the brokers who get their commission.

You are correct that we are not technically in a recession, but unless we manage to do something to enable the peons to be able to afford things. After all, a healthy economy requires the movement of money; when consumers spend less, manufacturers produce less and/or lay people off, which… well, I think you can already see where that goes.

Of course, as long as the country is doing fine, what does it matter how the people who live here are doing?

weeveeship's avatar

From what I’ve heard a lot of the gains in corporate earnings come from reducing variable costs (e.g. layoffs). This, coupled with the weak consumer spending, does not bode well.

As for GDP, the figures we get are just estimates. The figure for last quarter was actually revised down in August. So, who knows? We might already be in recession.

Your thoughts?

ETpro's avatar

@jerv No argument we need to reverse the trend that has been running for most of the last 30 years of funneling all the wealth to the top 1%. That is a major part of what brought on the economic crisis and what makes it so hard to fix.

@weeveeship The graph I posted shows the original and the revised GDP. Still not a recession, but not as healthy as we would like.

jerv's avatar

@ETpro Then it kind of calls into question the definition of “recession”, at least as it pertains to the actual health of the economy. Well, at least that question pops up in my mind.

weeveeship's avatar

@ETpro Should do you think ending the so-called “bush tax-cuts” would help?

Also, is there a possibility that even the revised GDP figures are too optimistic? I remember back when we had the crash of 2008 that no one really knew when exactly the recession started. It was later determined to be late 2006, IIRC.

ETpro's avatar

@jerv I see your point.

@weeveeship I fully support letting the bush tax cut for the top 2% expire when it is set to. That is, after all, how the Republicans themselves wrote the law. Extending it would add nearly a trillion dollars to the deficit over the next 10 years, and provide virtually no help to the economy. The non-partisan CBO studied what does and does not stimulate the economy and how effectively each stimulus works. Tax cuts for the rich came in dead last. They have almost no stimulative effect on the economy.

The Republicans who are fighting for more welfare for the wealthy claim that letting the tax cuts for the rich expire will hurt small businesses. The truth is that only 2% of small businesses would be affected, and if the Republicans would quit blocking the tax and investment credits that Obama is trying to push through to help small businesses, that would eliminate the impact on that 2% and help the other 98% as well.

jerv's avatar

@ETpro The truth is that any Republican who allows the tax cuts for the rich to expire will lose the votes of the party base, or at least enough of them that they would consider such a move to be career suicide since it’s unlikely that they would get enough votes from more moderate Conservatives to make up for such a loss and thus would lose their cushy Congressional seat.

Regardless of party affiliation, Congress really doesn’t have much of a vested interest in how the populace is doing since they get paid as long as the nation is doing okay. And it can’t change so long as we have a two-party system where the choices are Glen Beck and Sarah Palin on one side and an ineffective, unfocused bunch of over-reaching idealists on the other. Sadly, people like you and I really have no shot at getting elected since we don’t have daddy’s millions or corporate backing to fund an effective campaign, so we are pretty much stuck with the status quo unless we want to stage a revolution or coup.

LostInParadise's avatar

The distribution of income is more skewed than it has ever been since the Great Depression. I am no economist, but it seems to me that unless this problem is addressed unemployment is going to remain high.

weeveeship's avatar

@LostInParadise I have to agree. I also think that the high unemployment would drag down revenues. Companies can only do so much cost-cutting.

laureth's avatar

This question was asked five days ago. I’ll reprise my answer…

The National Bureau of Economic Research is the definitive authority in the U.S. where one can find the official start and end dates for economic cycles (including recessions).

You can see those dates here.

The current recession started in December 2007, and has not ended. Officially, they can’t declare a beginning or end to an economic period until 6–18 months after it happens, because these things are revealed mostly in hindsight by studying the economic numbers.

weeveeship's avatar

@laureth Thanks for the link.

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