Are We Going To See Another Recession?

Oct. 10, 2011 2:43 PM ET7 Comments
Tim Iacono profile picture
Tim Iacono

The latest batch of economic reports from around the world have called into question what had been, in the late-summer up until about a week ago, a growing consensus that the U.S. and other important parts of the global economy are either about to enter another recession or, in the view of some, are already in a new recession.

While clearly affected by the latest moves by European officials to stem the sovereign debt crisis, last week's impressive bounce for stocks and commodities was also influenced by a fading sense of imminent calamity for economic growth following an increasing number of comparisons between 2011 and 2008 in recent months.

It's worth taking a closer look at the question of whether the world is now facing another recession - the likelihood and, more importantly, the severity - as it is of utmost importance for any investor. Was last Monday's low for stocks and commodities an enduring low or will another economic contraction produce even lower price levels in the period ahead?

One thing is clear - the U.S. economy today is much different than it was three years ago and, as shown below, the soaring unemployment rate is a key reason why.

It has been a grim three years for many Americans who have either been out of work or who now earn much less than they did in 2008 and, while this is certainly an important component of the U.S. economy, it does not completely dictate economic growth.

A job market that will be very weak for many years to come is now being accepted as conventional wisdom in the U.S. and, while it may cause a great gnashing of teeth (especially in the run-up to the 2012 election) it is but one of many factors that will influence whether

This article was written by

Tim Iacono profile picture
Tim Iacono is the founder of the investment website 'Iacono Research', a subscription service providing market commentary and investment advisory services specializing in natural resources. He also writes a financial blog known as 'The Mess That Greenspan Made', a sometimes irreverent look at the many and varied after-effects of the Greenspan term at the Federal Reserve. Use the links below to visit Tim's website/blog.

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