Some economists watch for one of the most good signs, and others search for probably the most negative signs. 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. The forecast for doom and gloom is not native to only Wall Street as economists in Europe are starting to think it will happen there also, and the second tumble will even be global.
Moody’s warns of possible second slide
Moody’s, the credit rating agency, has put the chances of a second dip at 25 percent, up from their previous estimates of 20 percent, in a report by Moody’s Analytics. They have forecasted real estate prices in a double dip recession will fall one more 20 percent, as outlined by the Wall Street Journal. The business believes that the real estate market will stabilize sometime in 2012. The economy will even shrink a further 5 percent, as outlined by Moody’s.
Federal Reserve doesn’t see rainbows either
The Federal Reserve isn’t really calling for the bubbly to be broken out yet either. As outlined by CNN Money, the Federal Reserve announced after a meeting on Tuesday, August 10, 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.
Slower world recovery
The recession will continue to be global. Europe may also feel the effects of a double dip recession. The trade deficit is widening, meaning American industries are exporting and selling fewer goods. That is less cash from foreign markets coming in. The trade deficits along with a troubled housing market do not make great bedfellows for economic recovery.
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
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