Double-dip recession?

Don't mean to alarm you, but a few economists are warning that growth may resume in the third quarter, only to contract again in the fourth. "There is a real danger this is going to be a double dip and that after six months or so we'll have some more bad news," Martin Feldstein, former Reagan administration adviser, told Bloomberg Television.

The economy could "flatten out" or "even be positive" in the third quarter, and then it's likely to contract again in the last three months of the year as the effects of the federal stimulus program wear off and companies finish rebuilding inventories, he said. "There isn't going to be enough to sustain a really solid recovery," he said, even though recent data has provided some "good news" on the economy.

You might notice some squishiness in Feldstein's words - and it's worth noting that his remains a minority view. Most economists do not expect a second act to the recession. But the concern is not without cause: With unemployment likely to remain in the double-digit range well into next year (perhaps even into 2011), it wouldn't take much to upend any meager expansion.


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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
 
Mark Lacter, business writer and editor was 59
The multi-talented Mark Lacter
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