US may be in double dip recession: Analysts
05 Aug 2011
It was in the early '80s that a double-dip recession hit the US economy last, with a recession in 1981-82 was following one in 1980. According to some analysts it could be happening again. Amidst a generally negative economic outlook over the past two weeks a picture of a US economy falling further and recovering less than what was thought has emerged.
According to economists, when what may come to be known as Great Recession I hit the US economy, the government was looked up to fight back by stimulating the economy and when it did, the recession ended.
However, the Great Recession II, which the US may be entering, has led to a totally different response. They say the politicians were now squabbling over how much to cut spending. After months debating the issue, they passed a bill aimed at cutting spending over the next decade.
Economists say, if a double dip recession were to hit the US economy, it would have two significant things in common with the dual recessions of 1980 and 1981-82.
They say in each case the first recession came in large part with a sudden withdrawal of credit from the economy, with the economy recovering when credit conditions recovered.
They add in each case the second recession started at a time when the usual government policies to fight economic weakness were found to be inadequate.
