Double-Dip Optimism?

Not sure why.

From Yahoo! News about Wall Street Journal Poll:

Economists are getting increasingly optimistic about our chances of avoiding a double-dip recession.

A Wall Street Journal survey of 52 economists put the chances of falling back into a recession in the next year at one in four. That's down from a one in three chance, when the Journal put the question to the same group in September.

The Great Recession officially ended in June 2009, but since then growth has been frustratingly slow. Over the summer, anemic job growth, Europe's debt crisis and the wrangling in Washington over raising the U.S. debt ceiling sparked new fears that the economy could begin contracting again. But since then, signs have pointed to steady, though still far from strong, growth. On Thursday, the Labor Department said the number of people filing first-time claims for jobless benefits dropped to 390,000--the lowest level in seven months.

Still, economists in the survey said they expected the jobless rate to stay above 7 percent by 2014.

They also said there's a two in three chance that the Eurozone will fall into a recession, dragged down by possible Greek or Italian defaults. If that happens, the U.S. economy would likely also be affected.

I am not so optimistic. An imminent EU collapse would have widespread ramifications for the U.S. and the world as a whole. Deficit cutting will also lower aggregate effective demand and therefore growth. Private spending is unlikely to make up the difference because of the large amounts of debt still on their balance sheets.

This could be avoided if the EU creates a fiscal institution to carry out the spending necessary to prevent a collapse in demand and if the U.S. increases deficit spending and writes down large amounts of private debt, but all of these remedies seem extremely unlikely. Thus, I am rather pessimistic that we will avoid a double-dip recession.

Recovery or Double-Dip?

It's still amazing how economists and politicians keep predicting a recovery, in the face of overwhelming evidence that indicates otherwise.

June swoon: Economy added almost no jobs last month

It's hard to understand why this news still "comes as a shock" to economists. They continue to ignore the explanation of modern money and government finance given repeatedly by MMT'ers.

I posted just a few weeks ago about the likelihood of a double-dip recession, or at the very least a lack of recovery given the lack of overall demand and spending. And since the government shows no signs of backing off its austerity push, I stand behind my belief that the economy will continue to remain quite stagnant with little to no gains, and quite possibly more losses, in the job market.

The government isn't crowding out private spending, which I would say will be obvious to everyone when cuts in government spending don't bring about the growth in jobs politicians say will happen, but I'm not sure they will get that message. Instead, they might call for even more cuts! Oye!

Double Dip?

Certainly seems like we're headed that direction given the latest economic data releases. I don't see much help coming from our government (that includes both parties), despite their ability to further stimulate a recovery.

Time to panic? You Betcha.

It really can't be said too many times, there is NO debt crisis and austerity WILL make things worse. That is my official position. I really hope our nation figures it out before we repeat the mistakes of the Great Depression and the Lost Decade of Japan.