10 Signs We’re Headed for Another Recession – Or That the Last One Never Ended

by Justin Weinger on August 3, 2011

It’s no secret the economy is not doing well. Unemployment is still close to 10%. Under employment – the figure I think gives a better representation of how bad the labor market is – stands at 18.3%, meaning nearly one in five Americans either doesn’t have a job, or is working a part-time job while attempting to find full-time work. Second quarter GDP came in at only 1.3%, and for the first six months of 2011, the economy grew at less than one

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Did the America's greed push us into the first and (likely) second recession?

percent. Personal spending is down, and planned layoffs are up.

I’m sure the list could continue for a while, it’s just typing all the problems is making me kind of depressed.

All of these problems beg the following question: are we headed for a double-dip recession in 2012?

(Editorial comment: My answer is no, but not because I don’t think the economy will get worse – it will – but I just don’t really believe we ever truly emerged from The Great Recession. I think our next leg down will simply be a continuation of a recession we never really put in our rearview mirror.)

According to many leading economists, the answer is yes.

In an interesting article from The Atlantic, entitled “10 Signs a Double-Dip Recession is Around the Corner,” Douglas McIntyre, Ashley Allen, Michael Sauter, and Charles Stockdale point out 10 compelling reasons why a the economy is headed into another recession:

Perhaps the most powerful argument that the recession never ended or that a new one has begun is the persistence of unemployment. Fourteen million people are out of work. A third of those have been jobless for more than a year. May employment data showed the jobless rate rose unexpectedly and that the economy added only 58,000 jobs. Experts believe that the unemployment rate will not improve significantly until the monthly gain in jobs is consistently 300,000 jobs or more. And, at that rate the gains would have to go one for more than two years to bring the economy back to what is traditionally considered a reasonable unemployment figure.

(I just threw the above quote in to show that I’m not the only one who thinks the last recession never really ended.)

Here’s a Cliff’s Notes version of the 10 reasons:

  1. Housing still stinks
  2. Credit is still really tight
  3. There will be cuts in government spending because of the debt ceiling deal
  4. Unemployment is still really high
  5. The Chinese economy is slowing, too
  6. The Government can’t spend its way out of this slowing economy
  7. Oil prices are still relatively high
  8. The auto industry isn’t/wasn’t as healthy as it appeared
  9. Investment yields are down
  10. Inflation on stuff people spend most of their money on – energy, food, health care – is still pretty bad

The Atlantic article is really interesting and goes into a lot of detail regarding the ten points above, so I recommend that you read it in its entirety if you have a chance.

I 100% agree with the article. I believe the economy is headed into the tank and the next leg down will be far worse than what we saw in The Great Recession, namely because the Government can’t spend its way out this time.

The only beef I took with the article is I wish they would have put more emphasis on the fact The Great Recession might not have ended. I think years from now, when economists and historians look at this timeframe between the end of 2007 and whenever the economy finally turns around to sustainable growth, they will see what amounts to the second Great Depression, not two separate recessions.

What are your thoughts? Leave your comments below. And, as always, please share this post using the social bookmarking buttons below – especially Facebook and Twitter.

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{ 2 comments }

Rodney August 17, 2011 at 8:43 pm

One never really thinks about a list of 10 items that forecast that the economy is still in trouble, most only look at the housing market or the gas prices. The President has not indicated how much or when the taxes will rise or how many “Adjustments” he will make on Entitlements etc, etc, etc, … this leads to an uncertain future, which is enough for business’s in the US to hold back on spending. That is what we need, people to have enough confidence to start spending again. People need confidence and stability, and all of that is gone. I simply hope our recession doesn’t turn in to a “Depression”.

Brian Carr August 17, 2011 at 8:57 pm

Rodney – you’re forgetting the fact that the President doesn’t adjust taxes or entitlements, that’s something that comes from an overly divided Congress. I absolutely agree that Washington is to blame for a lot of the crisis of confidence, but the tone of your comment makes it seem as if you are laying it at Obama’s feet, which I don’t think is fair or accurate.

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