The Great Debate

Let’s stop talking about a ‘double-dip’ recession

Barely a day goes by without some expert publicly worrying whether or not the U.S. economy will fall into a “double-dip” recession. In a CNBC interview last September, investor George Soros said he thought the U.S. was already in one. Earlier this month, the former chief global strategist for Morgan Stanley cited an academic study to argue that “after every financial crisis there’s a long period of much slower growth and in almost every case you get a double dip.” Granted, this is a minority view; most economists are predicting sustained modest growth for the near future. Which makes sense, because while few are thrilled with the pace of comeback, the U.S. economy has grown for 11 consecutive quarters, beginning in mid-2009.

But given that the recovery is approaching its third birthday, how far away from the Great Recession do we need to get before another downturn would be considered not a “second dip” but simply a separate recession instead?

For all its ubiquity, there is no uniform definition of what a “double-dip” recession is; even the origins of the term are hazy. One analyst wrote in a 2010 research note that the term dates from about 1994, when there was concern about sliding back into the 1991 recession. But Safire’s Political Dictionary traces the term to a 1975 BusinessWeek article, attributing it to an unidentified economist in the Ford administration. (Tellingly, the “double dip” the government feared back then did not actually materialize.)

Much of what is meant by “double-dip” recession is intuitively clear: It’s what happens when a recovery is so feeble that, soon enough, an economy sinks back into contraction. It’s the “soon enough” part that no one can agree on. Investopedia defines double dip as “when gross domestic product growth slides back to negative after a quarter or two of positive growth.” If that were the case, fear of a double dip would long ago have subsided.

Of course, an imprecise term need not be useless. There can be good conceptual and historical reasons for associating an economic downturn with one that preceded it. Many Americans naturally think of the Great Depression as a single, sustained economic horror that began with the stock crash of 1929 and didn’t end until the U.S. entered World War Two at the end of 1941. Technically, that’s not true; the U.S. economy actually began growing in 1933 and continued to grow until 1937, when a second dip hit. But the economy had shrunk so severely in the first dip that it never got back to its pre-’29 level by the time it began contracting again – which redeems the popular fusion of two recessions separated by a weak recovery into one Great Depression. Some economists have claimed, more contentiously, that nearly back-to-back recessions in 1980 and 1981-82 qualified as first and second dips.

Why the coast is key to the survival of New Orleans


The following is a guest post by Mark Davis, a senior research fellow and director of the Tulane Institute on Water Resources Law and Policy at Tulane Law School. The opinions expressed are his own.

In the wake of Hurricane Katrina and the Deepwater Horizon oil spill the importance of the ecosystems surrounding New Orleans, and their vulnerability to mankind’s manipulations and mistakes, has never been clearer. Equally clear is the fact that for New Orleans to transform itself and create a better future, the metropolitan area must enter into a new, wiser relationship with the land and water surrounding it.

The fate and fortune of New Orleans have always been, and will always be, tied to the coast. In the past, New Orleans has had a troubled relationship with its watery environs. The proximity to the Mississippi River and the Gulf made the city’s founding and its rise to prominence possible. But the risk of flooding from the river, torrential rains, and the Gulf made it a hard bargain with nature from the beginning.

How Katrina revived New Orleans


The following is a guest post by Amy Liu, a senior fellow and deputy director of the Metropolitan Policy Program at the Brookings Institution and co-author of the New Orleans Index at Five. The opinions expressed are her own.

This weekend, President Obama will head to New Orleans to mark the 5th anniversary of Hurricane Katrina. He should use this opportunity to present a plan for the future, not merely acknowledge the past.

We know how these anniversary rituals go. Fact sheets summarize administration achievements. Remarks feature on-the-ground successes. But this year, successes are tempered by the lingering uncertainties and unmet needs of the massive Gulf oil spill.

from The Great Debate UK:

Residue of the Great Recession

Drummond- Don Drummond is Chief Economist at TD Bank Financial Group. The opinions expressed are his own. -

The Great Recession is over in North America.  But repair will be a slow work in progress and great risks remain.  Many of these risks are centred on policy matters.  The recession shook our understanding of some policy matters to the core, leaving more questions than answers.

The Great Recession produced deep output and employment losses in many countries, certainly including Britain and the U.S., but also an unprecedented degree of synchronization around the globe. 

Winning back the public’s trust

aron-cramer– Aron Cramer is president and CEO of BSR, a global business network and consultancy focused on sustainability. The opinions expressed are his own. –

The fall of Lehman Brothers last September triggered a collapse in financial markets, and then the real economy. It also signaled a further decline in the public’s trust in business. One year on, has anything changed?

At the start of 2009, only 36 percent of the U.S. public trusted business to “do what is right”—down dramatically from 59 percent one year before—according to surveys from the PR firm Edelman. But as of this July, trust levels in business had recovered somewhat, to 48 percent. Yet just as with the economic recovery overall, it is far too early to declare victory.

Europe borrows from Peter to lend to Peter

jamessaft1(James Saft is a Reuters columnist. The opinions expressed are his own)

Europe’s experiment in borrowing from Peter to pay Peter argues for a slow economic recovery with a low ceiling.

Data released by the European Central Bank on Monday showed that the supply in money is growing at best haltingly and that loan growth to euro zone households and businesses is at its lowest since records began.

Annual loan growth to the private sector slowed to 1.5 percent in June from 1.8 percent in May while the broader measure of money supply growth hit 3.5 percent.

from The Great Debate UK:

Bats and balls the key to economic bounce

simon_chadwick-Simon Chadwick is the Director of the Centre for the International Business of Sport at Coventry University, and runs the blog ‘Daily Sport Thought’ in which he addresses many of the important challenges currently facing sport. The opinions expressed are his own.-

I love sport, I have always loved sport, and I make my living researching, writing and talking about sport. As such, I do not need to be convinced about the social, cultural, psychological and health benefits associated with our engagement in sport. I also do not need any convincing about the economic benefits of sport, although some people will always and inevitably exclaim, "he would say that wouldn’t he!"

Well, it is not me it is actually the United Nations which states that sport may account for as much as 3 percent of global economic activity. It is the European Union that estimates sport to be worth 1.5 percent of its gross domestic product (GDP). And it is the British government that has recently acknowledged just how significant sport as an industry has become by commissioning research which will result in the development of robust measures for the contribution that sport makes to the British economy. Previous estimates already indicate that sport may generate as much as 2.5 percent of GDP, in which case this means it is an industry bigger than agriculture and not so far behind manufacturing.

The ugly attraction of fast shrinking Japan

James Saft Great Debate – James Saft is a Reuters columnist. The opinions expressed are his own –

Sure, seeing your economy shrink at a 15 percent annual clip is depressing, quite literally, but if you believe in even a tepid global economic recovery in the second half, then Japan is actually attractive.

There is no way to sugar coat the first quarter Japanese gross domestic product figures released on Wednesday: they are breathtakingly bad viewed from virtually any angle.