Tags: recession | double-dip recession | housing market | consumer debt

Economists: Next Recession Won't Be As Bad As Last

Friday, 26 Aug 2011 11:10 AM

If the U.S. does double-dip back into recession later this year or early 2012 as many fear, it won't be as bad as the 2007-2009 recession, economists say.

Banks are better capitalized now, the housing market has rid itself of many bad mortgages and U.S. corporations have trimmed their payrolls and are sitting on enough cash reserves to help weather another storm, experts tell MainStreet.com.

Consumers are spending less and paying off their debts as well.

"If there is another recession, I think it wouldn't be as severe and it would also be shorter," says Gus Faucher, senior economist at Moody's Analytics, MainStreet.com reports.

"And the reason for that is a lot of the imbalances that drove the previous recession have been corrected."

The downturn most likely would reflect in the labor market, where high unemployment rates would stay high.

"Unemployment is not going to double from 9 percent to 18 percent now, but it could get up to 10 percent and maybe more, hitting those highs we experienced last time around," says Paul Dales, senior U.S. economist at Capital Economics in Toronto.

Officially, the unemployment rate stands at 9.1 percent.

Various polls suggest that more and more experts see the possibility of a double-dip recession increasing and if the economy does avoid falling back into contraction, the best it can hope for are sluggish growth rates.

"I don't think we see a double dip, but maybe 2 percent growth instead," says Martin Schulz, managing director of international equities at PNC Capital, according to Forbes.

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Economy
If the U.S. does double-dip back into recession later this year or early 2012 as many fear, it won't be as bad as the 2007-2009 recession, economists say. Banks are better capitalized now, the housing market has rid itself of many bad mortgages and U.S. corporations have...
recession,double-dip recession,housing market,consumer debt
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2011-10-26
Friday, 26 Aug 2011 11:10 AM
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