Dow tumbles amid worry of recession
Experts warn of double dip
The nation is on the verge of a dreaded double-dip recession — if we aren’t in it already — and could face a worse wave of unemployment, consumer fear and corporate losses than the first brought, economists warned yesterday, as panicked investors sank the stock market 635 points on the heels of Friday’s dire credit-rating downgrade.
“I’d make the case we’re in the beginning of another recession right now,” said Simon Baker of Baker Avenue Asset Management, after the sixth worst Dow point drop in history. “I think we’re in a global recession, and the markets are reacting to that.”
Some economists yesterday pegged the threat of a “W-shaped” recession at up to 50 percent and said if more economic pain is on the way, it will likely be a lot more excruciating.
“We’d be starting with 9 percent unemployment, so the rate could go up to 12 or 13 percent,” said Boston University economist Laurence Kotlikoff, who puts the double-dip odds at 50-50. “We could have 20 million unemployed. That’s a lot of workers.”
If there is a double-dip, Main Street America would probably be hit hardest, said Andre Mayer of the Associated Industries of Massachusetts.
“The middle class has a double whammy,” he said. “The federal programs they benefit from are hurt and they’re also at risk of a direct impact with jobs.”
Baker cited several trends — GDP gains of less than 1.5 percent, 9.1 percent unemployment and a declining dollar index. “If you combine those three, you have to say we’re in a recession right now,” he said.
In the first day of trading since Standard & Poor’s downgraded the country’s credit rating, stocks fell sharply at the opening bell, tumbling deeper even as President Obama insisted that the United States will “always be a triple-A country,” and finally crash-landed to a low of 10,809.85.
“People are scared,” said Beth Ann Bovino, a senior economist for Standard & Poor’s — the agency whose U.S. credit rating drop precipitated yesterday’s panic.
“The numbers are coming in worse and worse. I wouldn’t quite say we’re in a recession just yet, but I reduced my forecast for GDP growth and upped likelihood of double-dip recession,” she said, pegging it at 35 percent. “Still, the baseline forecast is we’re still in a weak half-speed recovery with dips along the road.”
Conrad DeQuadros, a senior economist at RDQ Economics, said: “The fear is, if you’re only growing modestly, it doesn’t take much of a negative shock to push you back in recession. I think some people are fearful this downgrade might be that shock.”
On a hopeful note, Boston College economist Robert Murphy said interest rates are at rock bottom, companies are reporting profits and banks are lending again — all signs of progress: “The last time everything froze up and that’s not going to happen this time.”
Gus Faucher of Moody’s Analytics said he isn’t convinced the nation is headed into a second recession, saying the economy is still expanding and employment is slowly improving.
“But if there’s a drop in consumer and business confidence that will push us back into a recession,” Faucher said. “If we do fall into a second recession, it’s likely to be shallow, but I think it will last a while.”
Meanwhile, Harvard Business School historian Nancy Koehn said, “We’re getting a little carried away with ourselves right now. We can talk ourselves into a recession if we want to.”
“I’d make the case we’re in the beginning of another recession right now,” said Simon Baker of Baker Avenue Asset Management, after the sixth worst Dow point drop in history. “I think we’re in a global recession, and the markets are reacting to that.”
Some economists yesterday pegged the threat of a “W-shaped” recession at up to 50 percent and said if more economic pain is on the way, it will likely be a lot more excruciating.
If there is a double-dip, Main Street America would probably be hit hardest, said Andre Mayer of the Associated Industries of Massachusetts.
“The middle class has a double whammy,” he said. “The federal programs they benefit from are hurt and they’re also at risk of a direct impact with jobs.”
Baker cited several trends — GDP gains of less than 1.5 percent, 9.1 percent unemployment and a declining dollar index. “If you combine those three, you have to say we’re in a recession right now,” he said.
In the first day of trading since Standard & Poor’s downgraded the country’s credit rating, stocks fell sharply at the opening bell, tumbling deeper even as President Obama insisted that the United States will “always be a triple-A country,” and finally crash-landed to a low of 10,809.85.
“People are scared,” said Beth Ann Bovino, a senior economist for Standard & Poor’s — the agency whose U.S. credit rating drop precipitated yesterday’s panic.
“The numbers are coming in worse and worse. I wouldn’t quite say we’re in a recession just yet, but I reduced my forecast for GDP growth and upped likelihood of double-dip recession,” she said, pegging it at 35 percent. “Still, the baseline forecast is we’re still in a weak half-speed recovery with dips along the road.”
Conrad DeQuadros, a senior economist at RDQ Economics, said: “The fear is, if you’re only growing modestly, it doesn’t take much of a negative shock to push you back in recession. I think some people are fearful this downgrade might be that shock.”
On a hopeful note, Boston College economist Robert Murphy said interest rates are at rock bottom, companies are reporting profits and banks are lending again — all signs of progress: “The last time everything froze up and that’s not going to happen this time.”
Gus Faucher of Moody’s Analytics said he isn’t convinced the nation is headed into a second recession, saying the economy is still expanding and employment is slowly improving.
“But if there’s a drop in consumer and business confidence that will push us back into a recession,” Faucher said. “If we do fall into a second recession, it’s likely to be shallow, but I think it will last a while.”
Meanwhile, Harvard Business School historian Nancy Koehn said, “We’re getting a little carried away with ourselves right now. We can talk ourselves into a recession if we want to.”
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