Recently, there has been a great deal of talk about the shape of our economy as well as the looming possibility of a “Double-Dip” recession. Everyone wants to know, “Are we headed for a double-dip recession?” First, I would like to start by defining what a “Double-Dip Recession” is. According to Investopedia, a double-dip recession is a recession followed by a short-lived recovery, followed by another recession. No technical formula exists to determine when our economy enters into this. More often it is considered a judgment call by economists across the country.
According to the National Economic Research Bureau, an organization in charge of officially declaring whether a recession has started or ended, the current recession has been over since June 2009. That recessionary period lasted from December 2007 to June 2009. Since then, America has experienced enough growth to lift it out of recession. Still, several factors have most economists leaning toward the possibility that we could dip back into recession.
One of these factors is the unemployment rate. Until our unemployment rate goes back down, we will still have the possibility of another recession. Since the growth that has begun, unemployment has hovered on the national scale around 9.6%. In Ohio, unemployment is closer to 10.4%.
The GDP is another indicator, and, more importantly, of whether or not our National GDP is growing. After two straight quarters of negative GDP, a recession can be officially declared. Although the NERB has declared the recession over, thanks primarily to four (4) straight quarters of positive GDP, the Federal Open Market Committee has said growth is beginning to slow. Some economists are worried that the stimulus plans in place will not be able to sustain further growth. Most importantly, deflation and the possibility of massive amounts of debt de-leveraging have caused the economy to begin to dip again.
Although our economy may have officially stepped out of recession, the recovery has not really begun, and it may not pick up any time soon. “There are 4 cylinders that fire to push the economic vehicle out of recessionary mud and back out onto the highway of economic growth,” says Dr. Gary Shilling, one of Wall Street’s top economists. “At present, only one--the ending of inventory liquidation-- is generating significant power. The other three--employment gains, consumer spending growth, and revival in residential construction--are sputtering at best.”
If you work with a broker or are overly invested in the stock market, you probably lack a direct plan for income and preservation of your hard-earned savings. During recessionary times and, more importantly, retirement, focus must shift from making money to not losing money. If you are losing money in the stock market, getting close to retirement, or concerned about what may happen with the economy, Great Lakes Retirement Group may be a good fit. Make sure to visit our website, www.GreatLakesRetirement.com or give us a call at toll-free, 1-866-417-4156.