The headline on the New York Times article read, “Double Dip? A Tipping Point May Be Near.” The piece told readers:
Like a car spinning its wheels, the American economy hasn’t been getting much traction. Many financial indicators are issuing worrisome signals, millions of people are still out of work, and growth is slowing.
Will the economy pick up momentum or slip back into recession? […]
”We are at a very critical moment in the business cycle,” said Lakshman Achuthan, the managing director of the Economic Cycle Research Institute, a private forecasting group with an excellent track record. After the economy began to recover last summer, in his estimation, ”growth has definitely slowed.”
The article went on to quote William Gross, the co-chief investment officer of the Pacific Investment Management Company (PIMCO), saying the nation is “very close to a double-dip recession.”’
The dateline on the article? August 15, 2010 — nearly one year ago.
Is it me, or are we experiencing a rather acute case of deja vu?
Let’s see, the Dow Jones lost about 1,400 points over a fairly short period of time? Yep, that was last summer. President Obama’s poll numbers dropped about 10 points? Also last summer. The European debt crisis rocked global markets? Ditto. Job creation and economic growth in the U.S. stalled? Yes, again. Ubiquitous media speculation about a “double dip”? Another checkmark for the list.
If it seems like we went through these very similar conditions just 12 months ago, it’s because we went through these very similar conditions just 12 months ago.
This is not to say that conditions will soon improve because we overcame last summer’s ‘headwinds.” In 2010, stimulus money was still helping prop up the economy and the Fed was still engaged in preventing a more dramatic downturn. In 2011, the Recovery Act is but a memory and the likelihood of another round of stimulus is about as strong as my chances of winning the Republican presidential nomination. Worse, the Fed doesn’t want to act and the European debt crisis is arguably far more severe than it was 12 months ago.
Making matters slightly worse still, we now have a House Republican majority that seems almost desperate to make the economy considerably worse.
But I mention all of this anyway because (a) I just find it interesting that August keeps being awful for reasons that have nothing to do with the weather; and (b) these rough patches don’t have to be permanent.
