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July 22, 2010

Is a double dip coming?

Although the economy has improved, some recent numbers suggest a slowdown. For example, the broadest measure of economic growth was cut by .5 percent in its final revision. So could we be headed into another recession?

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"I think it is useful in answering this question to think of the economy as a car, and when that car goes in reverse -- goes backwards -- then we would say we have a recession. When the car is moving forward, we say we are not in a recession but we are in an economic growth situation.

"The economic car has actually been moving forward over the last six months at a fair rate of speed -- let's say 50 miles an hour.

"What I think the indicators are suggesting now is that in the coming months that rate of speed is going to go down. Maybe we will only move forward at 20 or 30 miles an hour. That still means we are not in a recession, but it means we are growing at a slower pace. And actually if you look at economic forecasts that were made about a year ago, that was suggested by many of these forecasters -- that we would have a burst of growth right after the recession ended, and then we would go back into much slower growth.

"And by slower growth, I mean about 2 to 2.5 percent -- just enough to nudge the unemployment rate down a smidgen each month but not anything to cause that rate to plunge. And I think that's the type of situation that we are in. We are in a sluggish economy. We are growing, but an agonizingly slow pace of growth."

Posted by deeshore at July 22, 2010 08:38 AM