Does The Debt Limit Agreement Make A Double Dip Recession More Likely?

way to report the data, so that the problem appears to be improving. People over 55 who can not find work will suddenly be reported as "retired". Women without jobs will become "stay at home moms."

Manufacturing is dismal, unemployment is dismal, housing is dismal, retail sales are dismal, gas prices are dismal, food prices are dismal, so there is no room to dip from here.

You can only dip if you have room to dip further down. If we dip from here, it is depression, not double dip recession.

The sad part is we are still spending Trillion each year in foreign wars and borrowing to spend it. Half of that borrowing is from foreign countries.

would cause a recession"

:eyes:

People with phds in economics could debate that.

The debate on what caused the great depression and what ended it rages to this day.

So this is unrecc'd for fearmongering.

1st quarter GDP was .04% 2nd quarter GDP was 1.3%

I think we have a good idea of what caused the Great Depression. Some of the causes included rampant speculation in the housing and equities markets and focusing on balancing the federal budget in the midst of a major economic downturn. Sound familiar.

Two of the biggest components of GDP and C and G, consumer spending and government spending. Consumer spending has yet to rebound. If you cut G, what has to happen to GDP, all other things being equal?

IT GOES DOWN.

Two quarters of declining GDP is, by definition, a recession.

There's no debate about any of that.

Bake

If I believed in conspiracies I would say President Obama was deliberately set up to be the "fall guy".

it makes a Great Depression more likely.

Cuts will be small.

Double dip is likely to start before the first cuts take effect. The first indicators occurred before the current debt-ceiling fracas.

Explain to me how causality works in this case.

I've heard a few outs offered, how causality can be inverted. They usually are trivial: The uncertainty can lead to pre-emptive slowdowns, but there's already a lot of uncertainty that most argue mustn't be interpreted to be bad. Or it'll lead to self-fulfilling predictions of doom, but we've had talking down the economy, on a strictly bipartisan yet polar basis since fall 2000.

One could argue that the sheer amount of borrowing makes a recession more likely. We heard such talk before deficit spending was considered a public virtue, the bigger the better (whether in a recession or out of it, whether during a period of decent job growth or sluggish growth).

I don't think anybody is suggesting running deficits in a era of prosperity.

"Discretionary spending" includes things like infrastructure and similar "pork" projects that give people jobs when there aren't any. No jobs, less revenue, less demand, more recession.

If I had to choose between not spending anything and spending hundreds of billion of dollars on defense I would choose the latter.