Double dip recession is a myth

[disneysteve]

I think most will revert back but there will be some who have "seen the light" and will stick with it, which is great. Some people have had the realization finally that there is another way to live and that it is possible to enjoy life without spending every penny that you earn and then some so I don't think it is all bad.

[bjl584]

I think most will revert back but there will be some who have "seen the light" and will stick with it, which is great. Some people have had the realization finally that there is another way to live and that it is possible to enjoy life without spending every penny that you earn and then some so I don't think it is all bad.

True. I guess if even one out of ten decide to continue a frugal lifestyle, progress has been made.

[am_vanquish]

I remember the first news broadcast that I saw reporting on how America suddenly discovered frugality. People were cutting back, using less, buying on sale, saving money, etc. I knew it wouldn't last forever. People will revert back to the way that they are in most cases. Frugality almost became a kind of fad for awhile there. Fads don't stick around long.

This was my wife's comment. If the economy hits the technical definition of a double-dip, it will extend the "fad" of being frugal because news organizations will continue to talk about the economy. Hopefully that will get a few more people to stick with frugality.

If the economy recovers, people will stop talking about it altogether and spending will return to regular levels (out of sight, out of mind).

Also, I think this is another example of the disparity between Main St and Wall St. Much like today's jobs report does not seem consistent with the earnings reports that were released recently for publicly traded companies.

[disneysteve]

Much like today's jobs report does not seem consistent with the earnings reports that were released recently for publicly traded companies.

There really isn't much correlation between the unemployment rate and corporate earnings. If anything, it is a negative correlation. Higher unemployment means higher earnings. If a company is able to maintain productivity with a smaller workforce, they reduce operating costs and increase their profit margin.

[EconoMutt]

I remember the first news broadcast that I saw reporting on how America suddenly discovered frugality. People were cutting back, using less, buying on sale, saving money, etc. I knew it wouldn't last forever. People will revert back to the way that they are in most cases. Frugality almost became a kind of fad for awhile there. Fads don't stick around long.

Yes, How America suddenly discovered frugality.
It's called going to the bank and getting turned down for a loan for the first time in their lives. ;-)

[billy10388]

I think we're in for slow growth for an extended period of time.
It will feel like a recession to many people, but technically we will have growth.

I also think so.

[neguy11]

I don't think a lot of people CAN revert back to their old ways because the easy credit is gone. The standards are so much stricter now. My income has increased and my debt has decreased but I'm still denied every time I apply for any type of credit. I used to be able to go online and with the click of a mouse have my credit limit increased, but no more and anytime I request an increase it's denied. I'd like to have more available credit so my credit score would go up, but I'm SOL.

[PMMM]

But it has hit a lot of real people and hit them hard. I think of those people all the time when I go by storefronts that are empty and used to hold a small business. There are thousands of them. I also feel for those people that did the right things and still got caught up in the layoff cycle.

I was recently in Maui and I couldn't believe all the businesses that were gone due to the economy compared to the last time I was there. Many of those people didn't do anything wrong and possibly did everything right. But they still suffered.

I can't help but feel for those people.

I don't feel for for those that jerked every dime out of their home to live a lifestyle that they couldn't afford or those that bought a house they had no business buying hoping they could turn the house before it went south.

[jefffou]

I agree that a "double-dip recession" can't really occur here. Recessions (depressions or any other economic cycle) are mostly personal. I mean, if one is able to keep his job, recessions can be beneficial, personally. Prices fall and interest rates may be lowered (Hello, Refi!).

It appears to me that when someone mentions double-dip recession, they're really speaking of the stock market. Meaning, there may be another leg to the stock market collapse.

Don't know whether this will happen or not, I just think that the word "double-dip" can only refer to something that has fallen, risen back to some degree, and is to fall again.

My $.02

[curtis.lesa]

My thoughts exactly!

[ez1]

There really isn't much correlation between the unemployment rate and corporate earnings. If anything, it is a negative correlation. Higher unemployment means higher earnings. If a company is able to maintain productivity with a smaller workforce, they reduce operating costs and increase their profit margin.

Great point! There is an article that supports that very well. I can't post links yet, but if you go to the CXO Advisory Group website, on their blog, there is an article linking unemployment rate and market fluctuations. I believe it's a free article. Maybe someone else can post a link?

[scotland]

The first post on this subject was made about a year and half ago.
In todays climate it looks like we are slipping into another recession.
In previous recessions the way to fight the recession was to stimulate the economy but now the politicians are squabbling about spending cuts.

[MonkeyMama]

One very interesting fact in the article is that despite the fact that we keep hearing about a 10% unemployment rate, it really depends on where you look. The rate among those with a college education is just 4.4% and among woman with a degree it is even less than that.

It's funny you mention, because in California we feel the unemployment numbers are WAY under-reported. The job market has been terrible here for most of the last decade. Both of our parents "retired" though the economy is the reason for their retirement. (My FIL decided to officially retire and draw a pension before he was laid off AGAIN, and my dad is still looking for work). My spouse easily falls in there, since he hasn't worked in a decade. HE hasn't looked for a job in 7 or 8 of those years, but he has looked for employment and not been able to find it.

In our immediate families, I am the only one with steady employment. Heck, throw in cousins and sisters and in-laws. I am the ONLY ONE with steady employment for the past 10 years. These are all college educated people who generally have no problems finding/keeping work. I can hardly think of any friends or family that haven't suffered from long-term unemployment.

I think we have been harder hit than many areas. (& certainly places like Detroit are far worse off - I know it could be far worse).

[greenskeeper]

It's been one long slide until the govt stepped in with "funny money" (QE1, QE2, and QE3 which they aren't advertising yet) to prop up the markets and economy temporarily.

Actual unemployment is well above 10% (more like 16-18%) because like most govt statistics....they lie!

just like inflation is calculated without energy or food prices considered, two of the things every american uses daily!

[photo]

In previous recessions the way to fight the recession was to stimulate the economy but now the politicians are squabbling about spending cuts.

But the economy was never stimulated. Government gave the illusion it was stimulating the economy, but reality is that infusing more government money will do nothing except give more illusions.

The problem is that politicians are like little children who make quick decisions without thinking it all through. For example, Cash for Clunkers was a complete joke. We have a 16-year-old car that was not eligible, yet a 4-year-old luxury car qualified for the program.