Yes, Virginia, a Double-Dip Recession is Possible

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Karl Smith says his internal models strongly suggest a double-dip recession, but he just can’t bring himself to believe it:

I look at a lot of fundamentals but at the end of the day the money markets drive my forecasts. The money markets are telling me in every possible way that recession is coming. Liquidity demand is rising, inflation expectations are falling, nominal interests rates are collapsing.

However, like Leamer in 2007, I am hard pressed to see what is left to recess? At the time Leamer doubted a recession because he didn’t think there were enough manufacturing jobs left to lose.

This time, I look at construction and local government and think the same thing. The cyclical employment sectors are already so far down. Are we going to start losing jobs in Health Care and Education at this point?

I don’t know that I can bring myself to believe it either. Then again, in 1931, guess what? It hardly seemed possible, but things got worse! The truth is that as long as insane conservatives continue to drive our national economic policy, a double-dip recession is not only possible, it’s likely. They simply show no signs of stopping their madness, and most of the mainstream press and punditocracy aren’t numerate enough to recognize what’s really going on. We are trapped in a cycle of insanity that’s truly Kafkaesque.

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is the first thing despots go after. An unwavering commitment to it is probably what draws you to Mother Jones' journalism. And as we're seeing in the US and the world around, authoritarians seek to poison the discourse and the way we relate to each other because they can't stand people coming together around a shared sense of the truth—it's a huge threat to them.

Which is also a pretty great way to describe Mother Jones' mission: People coming together around the truth to hold power accountable.

And right now, we need to raise about $400,000 from our online readers over the next two months to hit our annual goal and make good on that mission. Read more about the information war we find ourselves in and how people-powered, independent reporting can and must rise to the challenge—and please support our team's truth-telling journalism with a donation if you can right now.

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