Mark Thoma is frightened

In the Fiscal Times Mark Thoma expresses his fears:

Until recently, it seemed unlikely that we were headed for a double-dip recession. We were clearly looking at  a very slow recovery, especially for employment, but there was little reason to worry about a second recession.

Now widespread weakness in recent economic data makes a double dip much more likely. In May, just 54,000 jobs were added, auto sales declined significantly, retail sales were sluggish even excluding autos, and growth in manufacturing
slowed sharply. Meanwhile, house prices continue to decline to new post-bubble lows,  home sales have slowed, claims for unemployment insurance have risen, and consumer sentiment has weakened. Both stimulus spending and QE2 are coming to an end, state and local budgets are still a problem, and orporate bond issuance “fell to its slowest pace of the year.” The fall in investment activity is particularly worrisome because business investment has been growing at near pre-recession rates and has been a key factor in bringing about the moderate output growth we’ve experienced recently. If business nvestment falls off, it’s hard to see what will replace it.

A good example of a complete absence of Commitment! (or the manifestation of the wrong ones).

 

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