Harvard’s Feldstein Sees Risk of ‘Double-Dip’ Recession in U.S.

July 21, 2009 by · Leave a Comment
Filed under: Opinion 

The signs are pointing towards another shaky fall for the U.S. economy.  These earnings numbers will not hold up, write that down.  We are so far away from normal price to earnings ratios in the stock-market that it is just a matter of time.   Historically the normal P/E is between 8-12, right now its more like 18 which is quite high for the amount of debt, global recession and multi-decade high unemployment numbers coming from the U.S.

News (Bloomberg):

The U.S. recession may not be coming to an end and there is a risk the economy may experience a “double-dip” contraction, said Martin Feldstein, a professor of economics at Harvard University.

“There is a real danger this is going to be a double dip and that after six months or so we’ll have some more bad news,” Feldstein, the former head of the National Bureau of Economic Research and Reagan administration adviser, said today in an interview on Bloomberg Television. “We could slide down again in the fourth quarter.”

The economy could “flatten out” or “even be positive” in the third quarter, and then it’s likely to contract again in the last three months of the year as the effects of the federal stimulus program wear off and companies finish rebuilding inventories, he said.

“There isn’t going to be enough to sustain a really solid recovery,” he said, even though recent data has provided some “good news” on the economy.

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