Economists do make varied estimations, and some are rosy and others not. Recent economic data has given some experts reason to think that a double dip recession, where economic activity plunges, ticks up slightly, then plunges again before stabilizing, is beginning to look more probable. European analysts also as Wall Street are thinking it might happen, and that the fallout will be just as global.
Moody’s warns of possible second slide
Moody’s Analytics, a research division of credit rating agency Moody’s, has put the odds of a second dip at 25 percent, up from previous estimates of 20 percent. According to the Wall Street Journal, Moody’s has predicted that if a double dip recession does occur, real estate prices could fall a further 20 percent. The business believes that the real estate market will stabilize sometime in 2012. It is also estimated the economy will shrink a further 5 percent if it should come to pass.
Federal Reserve doesn’t see rainbows either
The forecast from the Federal Reserve is not one of days of wine and roses 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 Fed did not address the possibility of a double dip recession, but did announce it would keep the federal funds rate at or near 0 percent and purchase further Treasury securities.
Ripples across the pond
The recession will continue to be global. Europe may also feel the effects of a double dip recession. Fewer goods are being exported for sale, as American trade deficits have widened this year. That means less income is being received from overseas markets. The trade deficits along with a troubled housing market don’t make great bedfellows for economic recovery.
Further reading
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
No comments:
Post a Comment