Last week’s “news on GDP shows the double dip has arrived – an expansion of only 1.3% and consumer spending up .1% in the second quarter. Astonishingly low by any account.. The debt ceiling trouble and lack of a longer term resolution to the deficit will make it worse,” Douglas A. McIntyre writes for 24/7 Wall St.
“The US has entered a second recession. It may not be as bad as the first. Economists say that the Great Recession began in December 2007 and lasted until July 2009,” McIntyre writes. “That may be the way that the economy was seen through the eyes of experts, but many Americans do not believe that the 2008-2009 downturn ever ended. A Gallup poll released in April found that 29% of those queried thought the economy was in a ‘depression’ and 26% said that the original recession had persisted into 2011.”
McIntyre writes, “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.”
“There are several signs that a recession is firmly in place again and that the downturn could last for several quarters,” McIntyre writes. “Most are already easy for the average American to see.”
10 signs the U.S. double-dip recession has begun:
1. Inflation: The consumer’s ability to buy even the most basic clothing has been undermined
2. Investments have begun to yield less: The DJIA is up only 1% during the last three months and the S&P 500 is down slightly
3. The auto industry: May sales stalled. GM’s revenue dropped by 1% compared to May of 2010. Ford’s sales were down about as much
4. Oil prices: Recently, crude has moved back above $100
5. The federal budget: The deficit has caused a call for severe austerity measures which have already become part of the economics policies of countries from Greece to the UK to Japan. Job cuts in the U.S. will not be restricted to the federal level
6. China Economy Slows: US exports to China are key to the health of many American businesses
7. Unemployment: Unemployment creates two immediate problems. People without jobs drastically curtail their spending, which will ultimately affect GDP growth. The second is the need for tens of billions of dollars every year in government aid to keep the unemployed from becoming destitute.
8. Debt Ceiling: The United States debt ceiling,currently at $14.294 trillion, will probably be raised before the government has to cut back essential services on August 2
9. Access To Credit: The lack of access to credit has hurt the economic activity or both individuals and small businesses
10. Housing: Whatever the effects have been over the last three years, they are getting progressively worse as home values drop to decade lows
Much more in the full article here.
[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]
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