Merrill Says Double Dip Into Recession Still Possible

ByJohn S. McClenahen On July 24 manufacturing executives and economists will again scan the U.S. Labor Department's report on last week's initial jobless claims for signs of an improving labor market. A number substantially below 400,000 would be such a signal. Meanwhile, Kathleen Bostjancic, an economist at Merrill Lynch & Co., New York, warns that productivity growth can't keep the U.S. economy growing over the long term. Her reasoning: Continued cuts in the existing workforce would reduce disposable personal income, which would reduce consumption, which would drag GDP lower. "Either employment improves and the economy heads toward a self-sustaining path of trend growth, or we are on a path towards an economic double dip," she warns.