Are You a Single or a Double Dipper?
Walking down Fifth Avenue recently, I couldn't help but be struck by the number of empty storefronts, particularly at this time of year. So much for those green shoots. Talk of an economic double dip is rising, as typically happens at the tail end of every recession. What backs up the argument for a double dip? Let's have a quick run-through of the major reasons:
The government stimulus is limited in reach. Many experts argue that double the fiscal punch would have been needed to do more than merely prevent a depression (which we have, indeed, averted).
Unemployment continues to rise, as corporate downsizing continues and stimulus programs wind down.
Consumers are (still) tapped out. Already, we are seeing projections of holiday sales decreasing versus last year. With homes no longer functioning as ATMs, and job prospects uncertain at best, cash is tight in most households.
The stock market's bull run is losing steam. For the last few quarters, it has built in little downside to an upwards economic trajectory. Couple that with a weak dollar and ever-increasing gold prices and... it just doesn't smell right. Robert Shiller's recent statements underline my view that this is not just another recession.
Housing prices are still in negative territory. The fact that the latest Case-Shiller index has been used as evidence of stabilization is like congratulating a gambler on losing just $500 dollars instead of $2,000.
These same fundamentals, however, can be sliced and diced to support either point of view.
