Robert Shiller: Double-Dip Recession Is Still Very Possible

We Went A Little Overboard

Double-Dip Recession

The economy still hasn’t escaped the possibility of a double-dip recession, says Yale economist Robert Shiller, who predicted the housing bust.

“We just went through a Great Depression scare,” he told Bloomberg.

“The Fed and the government took on extraordinary measures to prevent that,” he said. “But I think our confidence is still vulnerable.”

And confidence is the major driver of the economy, Shiller says.

He defines a double-dip recession as another downturn before the economy gets completely back to normal. “I think there’s a significant possibility of that,” Shiller said.

As for the stock and housing markets, they are still way down from their peaks, so it’s difficult to argue they’re overvalued, Shiller says.

“But we’re in this very questionable economy. So there is significant risk of further declines in both the housing and stock markets.”

Star economist Nouriel Roubini is worried about a double-dip too.

He told a recent conference that developed economies around the world will face that risk for years, thanks to exploding government debt burdens and persistent unemployment.

Meanwhile, economist Robert Reich said the United States is sliding into a double-dip recession because the labor market continues to deteriorate.

“The private sector added a measly 41,000 net new jobs in May. But at least 100,000 new jobs are needed every month just to keep up with population growth,” he recently wrote on his website. The average length of unemployment continues to increase, rising to 34.4 weeks, up from 33 weeks in April.

“Why are we having such a hard time getting free of the Great Recession? Because consumers, who constitute 70 percent of the economy, don’t have the dough,” wrote Reich, who served in three national administrations and was a secretary of labor under President Bill Clinton.

By: Dan Weil

Dude, We’re Screwed! Recession to Get Worse – Unemployment to Rise – Government Spending Debt to Skyrocket!

Slow Growth – Double Dip Recession may be coming – Odds are over 50% – We are in the process of De-Leveraging our Debt and this trend will continue for years. If it happened all at once, we really would have a depression! Unemployment rate will rise 1% per year for the next few years and put pressure on the government to create jobs – spend more money – create higher deficits and debt, and the consumer will pull back and spend less – which is bad for business and people’s jobs! – all very risky for our long term economic growth. Dude! Save Your Money!!

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Gary Shilling says, House Prices Still Have Another 10%- 20% To Fall

A year ago, house prices finally stopped collapsing after two years of brutal declines. Over the following few quarters, moreover, they actually rose. This led many observers to conclude that the housing bottom had been reached and that we were headed for a v-shaped bounce.Not Gary Shilling.Gary Shilling, head of economic research firm A. Gary Shilling & Co., thinks house prices still have another 10%-20% to fall. Just as bad, Gary thinks this fall will happen over the next three years, meaning that house prices won’t bottom until 2013. Most people think prices have already bottomed, or will bottom later this year or next.Why is Gary so bearish?Supply versus demand.Basically, Gary says, we still have way too many houses relative to the number of people who want to buy them. Consumers are under pressure, overloaded with debts and struggling to find work, and the mass-hallucination that investing in housing was a “sure thing” is now a distant memory. These days, many would-be home buyers are moving in with relatives or downsizing or dumping second homes. And the supply-demand balance is so out of whack, in Gary’s view, that even super-low interest rates won’t keep prices afloat.

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