[/caption]It is a scenario no one wishes on any president, or moreover the country. The thought of a double-dip recession is the economic boogieman, which none of us wants to see.
I would hope that no matter how one feels about President Obama or his politics, that he or she is patriotic enough not to want another recession to befall us. With that said, we should not be emulating ostriches either, by placing our heads in the sand.
Bloomberg is reporting that former Federal Reserve Chairman Alan Greenspan has weighed in on the pulse of our economy, giving us the clues to look for which would forecast another recession.
Mr. Greenspan said that the slowing economic slowdown feels like a “quasi recession”, and that the economy might contract again if housing prices continue to decline. This “contraction” Greenspan speaks of would be the double-dip recession everyone fears.
We have laid out the importance of housing sales to our economy in past blogs – simply break down in your mind everything it takes to build homes and you will see how many industries are needed to contribute to the American dream of owning a home. All these industries working in tandem mean employment for a wide swath of America’s unemployed.
The National Associations of Realtors reported that home sales fell in June for a second month and its' chief economist, Lance Yun, said that sales will be “very slow” in the coming months. Mr. Greenspan went on to say that if mortgage foreclosures increase, it would further put negative pressure on housing, which might trigger the second recession.
The numbers are not looking good so far.
Case in point, last week the GDP was anemic, and the current Federal Reserve Chairman Ben Bernanke in his last report to Congress said that the economic outlook was “unusually uncertain.” This assessment caused the market to drop and now we have the former Fed chairman basically echoing this dire economic sentiment.
Greenspan detailed that, so far in the recession, the economy has been “distorted;” the former Fed Chairman said that only the rich have made out like bandits in this down turn – so much so that $800 billion has been amassed among these three groups… with they being the only consumers that are spending.
We wait with white knuckles, hoping that the important housing sales go way north, and leaving the double-dip recession boogie man in our rear mirrors.
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