Did Someone Say Double Dip?

We are not talking ice cream here. However, one must admit that the market’s recent reaction to bad news seems to have many thinking that the economy could slip back into recession. Remember, we had plenty of bad news last year and early this year, but the markets kept on advancing. Just last week, CNN/Money addressed this possibility in an article. The findings? "Some economists think a double dip is even less likely than it was earlier this year. David Wyss, chief economist with Standard & Poor’s, said that even though he thinks slower U.S. growth is practically a sure thing, the odds of a double-dip actually have shrunk to 20% from 25% earlier this year. Same goes for Derek Hoffman, founder and editor of The Wall Street Cheat Sheet, who also puts the odds of a double dip at 20%, when just a few months earlier he saw them at 50-50."

We keep pointing out that the economic news continues to be positive. The Federal Reserve Board’s "Beige Book" indicated continued strength across the nation. However, some districts are experiencing a slowdown and the latest retail sales release confirms these findings. So it begs the question: is the economy’s growth slowing in an example of a recovery experiencing "stops and starts" or is it possible that we will slip into recession? For now, the experts are telling us that a recovery is continuing. However, with stubbornly high unemployment rates and a struggling real estate sector, it just does not feel good. Meanwhile, the markets continue to bounce around violently. For those who are invested in stocks, real estate or any other form of commodity, these are not times for the faint of heart. For those with weak hearts, we suggest you go on vacation for a few months and then go back and read the box scores.

MICHAEL CLAWSON
Fairway Independent Mortgage