Some economists look for the most optimistic signs, and others try to find 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.
Moody’s says second slide could happen
Moody’s, the credit rating agency, has put the chances of a second dip at 25 percent, up from their previous estimates of 20 percent, in a report by Moody’s Analytics. They have forecasted 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. The economy will also shrink a further 5 percent, according to Moody’s.
Federal Reserve doesn’t smell roses either
The Federal Reserve doesn’t exactly think wine and roses are within the near future either. After a meeting Tuesday, the Federal Reserve stated the economy overall had not grown as fast as hoped, and that recovery would take longer than envisioned, as outlined by CNN Money. 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.
Ripples across the pond
The recession will continue to be global. Europe will also feel the effects of a double dip recession. Given the trade deficit is wider than ever, there is an indication that America, as a whole, is producing fewer goods for export. That means less income is being received from overseas markets. Coupled with a troubled housing market, these indicate a very slow recovery at best.
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
