Is a Double-Dip Recession ‘Round the Corner?

Sep 07, 11 Is a Double-Dip Recession ‘Round the Corner?
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Today we have a guest post by Debt Consolidation Care specialist, Samantha Spuckler.  Enjoy!

4 Signs of Yet Another Slump in the US – Is a Double-Dip Recession ‘Round the Corner?

After the Standard & Poor’s stripped off the pristine credit rating of the US and cut it to AA+, the fretting consumers are now worried about the US economic data that shows a double-dip recession is around the corner. The recent news on the GDP, or the Gross Domestic Product, shows that the double-dip is about to come.

There is an expansion of 1.3% and the consumer spending is up by 0.1% in the second quarter of 2011. The debt ceiling issues, the lack of long-term resolution about dealing with the budget deficit and recently the credit downgrade will make the situation worse. Though the US has entered yet another recession, experts are of the opinion that this one will not be as harmful as the first one.

There’s no surprise that most Americans wondered why the economic recession is still in progress as the home prices have fallen to drastic levels, same as that of 2002. The home values have dropped to almost 50% in states like Florida, California, Arizona and Nevada.

The most influential argument that can say that the recession never ended and that yet another double-dip recession is around the corner is the rate of unemployment within the US. Still now 14 million people not working and are struggling hard to keep up with their debt obligations. Have a look at some signs that show that a double-dip recession is almost around the corner.

1. Inflation:

Nothing can damage the confidence of the consumers as badly as the speedy rise in the prices of goods. There is a company that has augmented the price of a bag of tea by at least 18% as he says that the wholesale prices have already been increased by almost twice the rate in 2010. The price of cotton almost doubled in 2010 but has fallen in 2011. However since the apparels have been made months ago, consumers are subject to increased prices on clothes made of cotton.

2. The Auto Industry:

The car industry in the US has staged a comeback although the profitability is usually based on the layoffs that it has made over the last 5 years. Big giant companies like GM and Chrysler have emerged from bankruptcy and year after year the sales have improved. The revenue of GM dropped by 1% compared to that of May, 2010. The consumers are stepping back while making big purchases within this industry as they’re too worried about the economic prospects.

3. Lesser Yields on Investments:

Portion of the US economic revival was driven by the surging stock market. The stock market index has climbed above 12,000 and the prices of stocks have already doubled from their lows. As a result, the American investments that were destroyed by the collapse have yet again bounced back and enabled many people to splurge more than before. Now Americans have fewer places to invest their money except gold. The present market will not pose to be a friend to the investors.

4. Unemployment Rate:

A high unemployment rate creates two basic problems within an economy. Either the people without jobs curtail their spending so much that this affects the GDP or there is need of billions of dollars every year in the form of government aid to help the unemployment from becoming destitute.

Financial economists point out that this leverage helped contribute to the credit crunch within the US as an increasingly large number of people are unable to cover the costs of mortgage loans, home equity loans or even credit cards. The ability to consume things was severely damaged as their incomes have been stagnated. In a nutshell, there is no relief in sight for the US economy!

Samantha Spuckler is a writer for various finance related Communities including Debt Consolidation Care. She is a financial writer by profession and has specialization in dealing with financial problems and its solutions. Visit debtCC on Facebook: facebook.com/debtconsolidationcare

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