Seems the econo-blogosphere is agreeing with me about the w-shaped recession. Nobel prize-wining economist Paul Krugman said there is a 30-40% chance the economy will dip into recession the second half of 2010. At this weekend's American Economics Association conference, Krugman noted the Fed's exit plan and wind-down of stimulus money will slow growth.
Calculated Risk agrees there will be a slowdown, not a recession. He points to increased unemployment, probably above the current 10% mark. And EconomPic (love the tag line - "Darn Nice Eye Candy") looks at the cause of November's 16% drop in pending home sales. You guessed it - the expiration of the $8,000 new home buyer tax credit, part of Obama's Stimulus Package. The good news/bad news is that the credit has now been extended through June 2010 and to repeat home buyers. Good for homebuyers, bad for economy since we are just putting off the pain until - you guessed it again! - second half of 2010.
I've been predicting a W-shaped recession for July 2010. The articles below repeat my reasoning, AND MORE IMPORTANT, what you can do about it.
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