Double dipping...

Is A Double-Dip Recession—Or Worse—Finally Here?

For the US economy, the bad news keeps piling up, like that 60-mile, 11-day-long Chinese mega-traffic jam.

Sales of existing homes sank to a 15-year-low in July, the National Association of Realtors announced on Tuesday. The 27 percent drop surprised already pessimistic housing experts—a group of economists had told Dow Jones Newswires they expected sales to fall by just 14.3 percent. "The report shows the housing industry has hit more turbulence, is not leveling off, and is worried about a nose-dive," Mitchell Hochberg, who works for Madden Real Estate Ventures, told Dow Jones.

The grim news from the housing market comes at the heels of a startling uptick in the number of Americans applying for state jobless benefits for the first time. For the week of August 10-14, claims rose by 12,000 to 500,000, the Labor Department reported, marking the highest level since mid-November of last year, not long after the recession technically "ended." The increase in initial claims is indicative of a stagnant labor market and a 9.5 percent unemployment rate (and, for those of you keeping track, a real unemployment rate of 16.5 percent) that shows no sign of decreasing as the Obama administration's stimulus efforts start to wind down.

And there are plenty more negative indicators to point to. Home-builder confidence is dismally low; housing starts decreased last month; commercial real estate prices keep dropping; the Philadelphia Federal Reserve's Business Outlook Index suggested weakened manufacturing activity in August; and on and on.

So what to make of all this grim news? Has the economic recovery temporarily stalled? Are we headed for a double-dip recession—or worse?

That, of course, depends on whom you ask. In the past few days, though, a chorus of economists have voiced increasingly pessimistic views on where the economy is headed. Mark Zandi, chief economist at Moody's Analytics and a former McCain aide, said on Monday that the housing market was headed for a "double-dip" of its own as the last effects of the federal government's first-time homebuyer tax credit finally escape the housing market. "We probably, almost assuredly, will experience more house price declines," Zandi told CNBC. "By those two criteria, I think that would qualify as a double dip."

Link:
http://motherjones.com/politics/2010/08/double-dip-recession-housing-economy-zandi