Worst is Yet to Come With Possible “Double-Dip” Recession

November 12, 2009 by Debbie Dragon

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The outlook on the recession continues to be bleak. With another 200,000 jobs lost in October, 2009, the unemployment rate now sits at 10.2%. According to the New York Daily News, if you figure in the partially employed and “discouraged” workers, the figure actually sits at 17.5%. The numbers are bleak, and not looking to improve anytime soon.

Now, President Obama, according to Reuters, is warning of another financial crisis known as a double-dip recession. While on a trip to China, he warned the United States about the need to control the rapidly rising deficits the country is facing. With this spending seeming to be out of control, any confidence consumers regain amidst the recession could spiral downward.

According to Investopedia, a double-dip recession occurs when, after a period of growth and recovery, the economy slides back into a recession again. Many times, the second recession is caused by consumers not spending as much due to layoffs and tightening of budgets, thus causing a lessening in the demand for goods. The cycle of more job losses then continues and spirals into the second recession.

President Obama’s current economic dilemma is how to create jobs for those who are unemployed, how to stimulate companies to create jobs and bring on more workers, and how to boost the economy while putting it on track toward long-term deficit reduction, as he promised during his presidential campaign. Many measures have been considered, including the stimulus incentives for individuals through the “cash for clunkers” programs and real estate tax credits. Incentives for companies to hire employees are also being looked at, with tax measures being another possibility.

The bailouts and other government spending programs to help companies in trouble, especially banks and the automotive industry, along with the measures to help individuals has put the national deficit at an all-time high. President Obama expressed concern that if the debt continues to be added onto and jobs continue to be lost instead of created, confidence in the economy would continue to plummet.

A second recession would deliver a much more serious blow to the economy and would likely end up lasting longer than the first. Consumers’ confidence in the economy would play a big factor, with many more tightening their belts and cutting spending. Companies would also continue to be reluctant to hire new employees in the face of such a bleak outlook.

President Obama faces the daunting task of trying to rebuild the country’s confidence in the economy amidst continuing staggering job losses each month. Not only must he answer to the rising public demand for more jobs and help for the unemployed, but he must also find a way to stimulate the economy into growth without continuing to feed the ever-growing national deficit. It is an unenviable task amidst a scenario that is unlikely to improve anytime soon.


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