Double Dip Would Mean Depression
With the stock plunge that occurred over the past week and amid the Standard and Poor’s downgrade of the U.S. credit rating from AAA to AA+, the buzz has been spreading about the likelihood of another recession.
CNN Money recently surveyed economists about their risk assessment of the economy.
The result was an increase in the average assessment from the 15% that was reported three months ago to a 25% risk.
Chief economist of Moody’s Analytics Mark Zandi raised his risk estimate from 25% to 33% after the stock plunge, reported CNN Money.
And as economists have indicated, a double dip in the economy could be devastating.
“It won’t feel like a new recession,” Zandi told CNN Money. “It would likely feel like a depression.”
Zandi and other economists gave some reasons why a second recession would be so much worse this time around.
The unemployment rate is nearly double what it was during the Great Recession in 2007. While then the unemployment rate was 4.7%, today it stands at 9.1%.
The overall economy, the article reports, is significantly less stable than it’s been in quite a long time.
Not to mention, the economy is still in the process of recovering from the last recession.
And with the amount of time it took to raise the debt ceiling, some fear the government would be much slower to respond to a new recession.+16
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