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When I was a kid, I used to love double-dips. I’d go to the doctor and afterwards, we’d stop by the drug store soda fountain for my free ice cream. Summers, there would be all the ice cream suppers at the churches with fresh home made ice cream and cake. Double-dips of chocolate ice cream and cake!
Unfortunately however, today’s double-dip will be a recession. Yes, there it is; I’m predicting that we will officially fall back into a recession in the very near future even though for the 25M to 30M long term un and underemployed, we’ve never, ever left the recession that began officially back in December ’07 and ended officially in June ’09. I do so very much hope that I am wrong on this but will even go so far as to act like an economist and claim to be surprised if I am wrong.
What makes me think this will happen? Well, to start with, too many folks like The Benbernank in his speech last Tuesday in Atlanta and the presidents of the Philadelphia and New York Federal Reserve Banks all saying the economy will improve in the second half of 2011. In addition, Bloomberg has a survey of economists claiming this as well:
After growing at a 2.3 percent annual pace this quarter, the world’s largest economy will expand at a 3.2 percent rate from July through December, according to the median forecast of 67 economists polled from June 1 to June 8.
Rising exports, stable fuel prices, record levels of cash in company coffers and easier lending rules will be enough to overcome the damage done by one-time events like poor weather and the disaster in Japan, economists said. Nonetheless, the current slackening means Federal Reserve policy makers will wait even longer to raise interest rates next year, the survey shows.
The reality is, the corporations have been holding those record levels of cash for over a year now (via WSJ). They have used the money to buy back stocks or to invest in equipment (NY Times). Another reality is there are always “one-time events.” This year it is earthquakes/tsunamis/nuclear melt-downs in Japan and tornadoes in Alabama and Missouri combined with floods along the Mississippi and Missouri Rivers and wildfires in Texas and Arizona. This past winter, it was record blizzards. Later this summer it will be hurricanes in some areas and droughts in others. All “one-time events.”
BlackRock Investment Management CEO Laurence Fink is predicting that the US economy will lag the global economy for the next five to ten years. CNN says it will be because of household debt. My guess is that it won’t be helped by the Japanese economy contracting 3.5% in the first quarter, Australia adding fewer jobs than predicted (economists surprised!), Spain making unilateral moves (via NY Times) that go against the wishes of businesses and labor that no one thinks will work.
I find it interesting that if you check the link at the footnote on the Roubini wiki page and scroll through the “8 who saw the financial crisis coming and the 8 who didn’t,” the “8 who didn’t…” are the ones still being quoted all the time. So much for Roubini becoming a “sage” instead of a Cassandra.
As always, we are not helped when we see Dana Milbank proclaiming that Austan Goolsbee leaving means President Obama is losing a “voice of reason.” That is the same Goolsbee who just last week was bragging about 1M private sector jobs having been created while ignoring the hundreds of thousands of public sector jobs lost.
Nor are we helped when the President goes on his weekly radio address and announces (via AFP):
“Now, government is not — and should not be — the main engine of job-creation in this country. That’s the role of the private sector, ” the president said in his weekly radio and Internet address.
“But one thing government can do is partner with the private sector to make sure that every worker has the necessary skills for the jobs they?re applying for,” Obama added.
As I noted in this post from Thursday, Dean Baker has already written the rebuttal to the “necessary skills” argument.
President Barack Obama, seeking to ease voters’ concerns about his handling of the U.S. economy, said on Saturday a meeting with his jobs council next week would focus on possible further steps to boost hiring in the short term.
That would be the “Jobs Council” of Outsourcers and Masters of the Universe.
Just think, now Reuters has a headline that starting tomorrow (Monday June 13), they will offer a column from Larry Summers on the “jobs crisis.”
I keep wondering how The Onion manages to write their stuff with all the competition from reality.
And because I can:
Cross posted from Just A Small Town Country Boy