Posts Tagged ‘double-dip’

US Recession officially over – but what about the second dip

September 20, 2010

The recession officially ended in June 2009, according to the Business Cycle Dating Committee of the National Bureau of Economic Research, the official arbiter of such dates.

As many economists had expected, this official end date makes the most recent downturn the longest since World War II. This recent recession, having begun in December 2007, lasted 18 months. Until now the longest postwar recessions were those of 1973-5 and 1981-2, which each lasted 16 months. Recession and expansion dates are based on various economic indicators, including gross domestic product, income, employment, industrial production and wholesale-retail sales. The Business Cycle Dating Committee typically waits to declare that the economy has turned until well after the fact, when it has a longer track record of economic data to confirm a new trend.

But the double-dip remains a distinct possibility even if the OECD believes the US may just escape it.

A graph of the Early 1980s recession in the Un...

Triple-dip in the 1980's

The United States will experience a slow, jobless recovery from its deepest and longest downturn since the 1930s but will avoid a double-dip recession, the Organisation for Economic Co-operation and Development said today. In its annual health check of the world’s biggest economy, the Paris-based OECD said that it expected activity to expand by 2.6% in both 2010 and 2011 without having a marked impact on the country’s near double-digit jobless rate.

But the optimism is speculative and not shared by everybody. Some believe that jobs growth is not happening at a speed sufficient to avoid the double-dip.

The U.S. economy has a “significant likelihood” of entering a double-dip recession if the government doesn’t step in to help the unemployed, economist Robert Shiller told MarketWatch News Break in August. The Yale University professor and author of the best-selling book “Irrational Exuberance” pinned the probability of a double-dip recession at more than a 50-50. Shiller pointed to the nation’s stubbornly-high unemployment as a root cause of lingering economic woes. And with the Federal Reserve running out of bullets to fight a second recession, he urged Congress to join the battle and focus on putting people back to work.

Germany: Highest growth rate since Reunification

August 15, 2010

The motor of the European economy is revving up again.

Der Spiegel reports:

Graphic: German growth forecasts for 2010

Germany just posted its strongest quarter of economic growth since reunification in 1990. During the second quarter, an exports boom, increased consumption and government stimulus helped the country chalk up growth of 2.2 percent. Buoyed by a surge in exports and continuing government stimulus programs, Germany’s economy is recovering at a faster pace than most economists expected. During the second quarter, gross domestic product increased by 2.2 percent on the previous quarter, the Federal Statistical Office in Wiesbaden announced on Friday, marking the largest quarterly economic growth since the country’s reunification in 1990.

There has been some criticism of the austerity package being introduced by the German government and of the ending of the stimulus packages. But perhaps the timing is right after all. But whether German growth can prevent a doubel-dip recession in the rest of Europe remains to be seen.

The 5 million unemployed in Germany in 2005 has now reduced and could soon be  less than 3 million.

In addition to benefiting the labor market, the German economic stimulus program also boosted consumer spending. Short-time workers have more disposable income than the unemployed, and as a result, German consumers were hardly forced to cut back during the crisis.

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