A double-dip recession describes a period when the economy goes into recession, briefly bounces back, and then plunges into recession again. The United States experienced this type of recession in the early 1980s. A double-dip recession is sometimes referred to as a W-shaped recession, which describes the economy’s trend line on a graph and shows two pronounced depressions with a rebound in the middle.
A recession is defined as two or more consecutive quarters of negative growth, as measured by the gross domestic product. In a double-dip recession, the economy shows negative growth for two or more quarters, positive growth for a quarter or two, and then two or more quarters of negative growth. The recession is not considered completely again until the economy shows more than two consecutive quarters of growth. While countries tend to enter recession independently of one another, if the factors causing the recession affect most of the world, a global recession can occur.
A double-dip recession can sometimes be caused when the government takes overly aggressive measures to stabilize the economy and encourage recovery. In the United States recession in the early 1980s, Federal Reserve Chairman Paul Volker, for fear that the economy would suffer from inflation, sharply raised interest rates. While there was an improvement in the short term, the increase in interest rates soon caused the economy to decline again, resulting in a double-dip recession. This second fall drove interest rates down again, resulting in deflation, or a decline in prices.
Another distinctive feature of a double fall is the so-called recovery without employment. That is when most indicators, including gross domestic product or GDC, select economic growth, but the unemployment rate remains high. Employment growth is an indicator of the drag of economic growth, which means that it occurs after other economic indicators show improvement. Therefore, when other indicators point to the recovery, but the expected employment growth does not follow, the economy could fall into recession again, producing a double-dip recession.
A double-dip recession tends to be the worst kind, as consumer confidence erodes when the economy seems to be recovering but then decreases again. Consumers fear that the recession will be permanent and could worsen in depression. It makes a double-dip recession much harder for the economy to get out of.
- Getting a job during a recession can be difficult.
- A brief recovery from a recession followed by another economic crisis is a double-dip recession.
- A recession is defined as two or more consecutive quarters of negative growth, as measured by a country’s gross domestic product.
American double-dip recession and the rise of risk (A global perspective)
There was a prediction that the American odds would fall back into recession’s next rising period. Other events happened, such as rating agency standards, budget contraction, and the citing risks from the debt crisis. As a result, the government enforced the law to reduce expenses and higher taxes. It was the so-called fiscal cliff that will crunch the state economy.
The US economic condition prospects become worse when the Chinese economy has enormous uncertainty. It was also a hard landing risk for China. Also, the possibility of the next so-called potential cliff increased with the rise of debt crisis contagion.
In the second quarter of the American economic recession, the global economy’s annual rate increased by around 1.5%, and an unemployment rate was above 8% that was the lower. The economy of the nation eurozone has declined with a rate of 0.2% in the second quarter as the impact of the recession. However, the predicted contraction was 0.6% that year.
It is important to understand the double-dip recession because America today is always poised for an economic crash due to the social and economic climate based on what is going on in the country. There is no guarantee there will or won’t be a recession. However, the more each American adult knows about what a recession is or how a double-dip recession can affect the economy will allow them to be prepared if one hits.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.