Economists do make varied forecasts, and some are rosy and others not. Recent data from the economy indicates a double dip recession, where the economy starts to improve after a fall, then plunges again before settling, is more probable than previously thought. Many think the fallout could be just as global as the last major plunge, as European analysts as well as those on Wall Street acknowledge it might happen.
Second dip claimed possible by Moody’s
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. They have forecasted real estate prices in a double dip recession will fall another 20 percent, according to the Wall Street Journal. The business believes 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 trees of green or skies of blue
The forecast from the Federal Reserve is not one of days of wine and roses either. As outlined by CNN Money, the Federal Reserve announced after a meeting on Tuesday, August 10, that the economy was not recovering as fast as had been hoped and it will take longer than previously estimated for things to return to peak output. 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.
It’s not a fairly picture anywhere
The recession will continue to be global. . The trade deficit is widening, meaning American industries are exporting and selling fewer goods. That is less money from foreign markets coming in. Coupled with a troubled housing market, these indicate a very slow recovery at best.
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
