Tuesday, November 13, 2012

There will be no 'double dip' recession

One still occasionally hears discussion of the possibility of a "double dip recession." At this point, however, there is no reason to discuss the possibility of a double dip recession at all. The probability of a double dip is zero percent precisely because the last recession ended back during mid-2009. It is much too late for there to be a double dip recession. If we discover that we're in recession right now, it will simply be an entirely different one from the last one which lasted (officially) from December 2007-June 2009.

It has now been almost five years since the beginning of the last recession, and the "expansion" has been going on for more than three years. The realities of persistent unemployment, of course, challenge the definition of "expansion" somewhat, but a new recession at this point could simply be defined as a stand-alone recession following a period of lackluster economic growth.

These comments are not intended as any sort of forecast.

Investopedia, for example, refers to a double dip as two recessions separated by a short expansion period of less than one year. Forbes, on the other hand refers to a possible recession in the near future as a double dip.

A perfect example of a double dip would be the recessions of 1980 and 1981-82 which were separated by only 12 months.

The 1969-70 recession and the 1973-75 recession were separated by only three years, but few refer to those two as a double dip. We're already 3.5 years out from the last recession today.