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10 Ways to Tell We’ve Started the ‘Great Recession Part II’

Technically the Great Recession ended in 2009, but two years later the American business climate is still feeling the pain. …

Technically the Great Recession ended in 2009, but two years later the American business climate is still feeling the pain. In fact, it seems that we are headed for a second recession or “double-dip” as analysts call it. There seems to be increasing coverage of the second leg of this recession, most recently a proclamation by analyst Meredith Whitney and an article on 247wallst.com.

Here, on 247wallstreet.com, is a list of 10 reasons that another recession has started in the United States:

  1. Inflation—the price of clothing, cotton, sugar, meat, corn and coffee have all risen
  2. Investments have begun to yield less—the Dow Jones is only up 1% over the last three months, the S&P 500 is down and treasuries are yielding only 3%
  3. Auto industry—GM’s revenue is down 1% from May 2010 and gas prices are high—car companies may not create as many jobs as expected
  4. Oil prices—Crude is at $100, gas prices are higher, OPEC won’t up production
  5. Federal budget—the budget deficit does not allow for stimulus money, government and the private sector are expected to shed jobs
  6. Slower Chinese economy—manufacturing and export numbers are down (exports to China are crucial for the health of American businesses)
  7. Unemployment—high unemployment numbers are bad for GDP because spending decreases and government aid will be required to assist the unemployed (we already have a large deficit), 5 million US workers have been unemployed for more than one year
  8. Debt Ceiling—a decrease in debt will mean higher taxes and lesser government aid services
  9. Access to Credit—banks are unwilling to lend to smaller companies because of their low cash flow and small balance sheet, credit card debt is high, banks want 20 percent down on house purchases
  10. Housing—single-family homes with negative equity have reached 28.4 percent, home values continue to decrease

In addition to 247wallstreet.com’s explanation, analyst Meredith Whitney, in a CNBC.com article, discusses the fact that federal stimulus money ran out in June. Whitney says, “This affect the macro environment, this affects employment, this affects spending, this affects every corporation within the United States because so many corporations are reliant on contracts from state and local governments. So, this [debt crisis] situation in DC exacerbates it, but the states are in a bad situation even without the situation in DC.”

More of Whitney’s reasons we are heading into a double-dip:

  1. GDP rose at an annual rate of 1.3 percent in Q2
  2. Housing is suffering because states have had to raise taxes and cut social programs
  3. Layoffs — 50,000 on Wall Street alone, more to come in other sectors

Read: Ten Signs The Double-Dip Recession Has Begun

Read: Signs of a Double-Dip Have Emerged: Meredith Whitney

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