Economists: Second Recession Will Be Worse Than First

Tuesday, 09 Aug 2011 09:43 AM

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The U.S. is teetering on the brink of a fresh recession and experts say this downturn will be worse than the one from just a couple of years ago.

Before the last recession, households had more income, which gave them cushion to live through the tough times.

Then the recession hit and household revenue dried up to an extent.
Recovery came, but many are still reeling from the economic downturn, and now that fears are growing that the U.S. is in store for a dreaded double-dip recession — where the economy contracts, recovers a bit and then dips back into contraction — concerns are that since households are still struggling, they won't be able to spend and fuel more recovery the next time around.

Plus fiscal and monetary stimulus programs and other artificial measures won't be around this time to prop up an ailing economy.

"It would be disastrous if we entered into a recession at this stage, given that we haven’t yet made up for the last recession," says Conrad DeQuadros, senior economist at RDQ Economics, according to the New York Times.

Unemployment rates remain well above pre-recession levels, and household incomes remain weak, which does not bode for consumer spending, the motor of the U.S. economy.

While most admit the economy is not going to perform as well in the second half of this year as once hoped, some do believe the country will avoid a double-dip recession, including former Federal Reserve Chairman Alan Greenspan.

"I don't see a double-dip, but I do see it slowing down," Greenspan tells NBC's NBC television's "Meet the Press.

Investors should keep an eye on Europe, as debt concerns in Italy can threaten the global economy, Greenspan adds.

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