Headed to Second Recession that Worse Than First in USA?

Popular searches on the Web Monday include the keyword “recession,” as many economists warn the U.S. economy may fall back into its second recession.

After Standard & Poor’s downgraded the U.S. credit rating, worry and anxiousness about a double-dip recession have increased. Fears a second recession could possibly be worse than the first one that started in December 2007 are also prevalent.

Given the tumult of the Great Recession, this can be hard to believe. However the economy is much weaker than it was at the outset of the last recession in December 2007, with most major measures of economic health – together with jobs, incomes, output and industrial manufacturing – worse today than they were back then. And progress has been so weak that nearly no ground has been recouped, although a recovery technically began in June 2009.

When the last downturn hit, the credit bubble left People with lots of fats to cut, but a new one would force families to cut from the bone. Making things worse, policy makers used most of the economic tools at their disposal to fight the last recession, and unlike during the first downturn, there would be few policy remedies available if the economy were to revert back into recession..

What I discover most extraordinary is that people look like only now to be waking up to this realization. For those of us not blinded by ideological religion based judgments, the signs have been legion for months that the economy was headed into stagnation. The malaise set shortly back. That solely now analysts are pointing to income inequality as an issue amazes me. Anybody taking a look at personal consumption to drive the economy was deluding themselves. First, most households never experienced the upside which was asymmetrically distributed towards the highest wage earners. Second, most households used debt to keep up the illusion of progress. Third that debt was typically secured towards a house that’s now no longer worth anywhere close to what it was. Fourth, wages are stagnant, stagnant, and stagnant. Fifth, most households are, subsequently, pressured to save with the intention to retrench their balance sheets. So, sixth, most households will not going to spend until they really feel safely beyond the debt crisis. Thus there isn’t a broad based upsell to be seen in consumption. It existed solely within the minds of those analysts who ignored the nature and depth of the crisis. That small part of our economic system inhabited by the better off is humming along. Those bonuses are back. Banking and its feeder system is alive and well. However the actual economy is rotting.

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