What A Double-Dip U.S. Recession Would Look Like

By John S. McClenahen Most economists discount the idea of the U.S. economy experiencing a significant slowdown before resuming recovery, a so-called double-dip recession. Indeed, the latest series of economic forecasts from Global Insight, Eddystone, Pa., put the chance at only 30%. But this is what its economists believe a double-dip recession would look like: In early 2003, Congress fails to extend unemployment benefits and does not agree on a tax-reduction package. Corporate earnings forecasts are revised downward. A stock market rally turns into a rout. Housing falls. Alan Greenspan and his Federal Reserve colleagues lower the federal funds rate to 1.00%, but not in enough time to keep GDP from falling at a 1.6% annual rate in the second calendar quarter of 2003.

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