The big talk these days is over the double-dip, the question of whether or not the economy will slip back into recession. The bulls say no, the bears say maybe, the pragmatists say it doesn’t matter because the economy stinks regardless. The markets are talking about it, the Fed is thinking about it, Spain’s problems are threatening to make it come true.
Look, if the recovery builds steam, as most people still believe, then the economy will grow, jobs will be created, and the government’s efforts will have paid off, no matter the cost and there won’t be any double-dip. If the recovery falters, if the jobs markets stagnates, if wages stagnate, if the government is so squeezed from its last go-round with bailouts and stimulus that it’s unable to blow mind-numbing amounts of money on boosting spending, well, there still won’t be a double-dip. Why?
Because it’ll be a sign the economy never actually came out of the first dip.
The signs are growing that the real economy is hitting a plateau, if not rolling over, as the various and massive government interventions into the private market fade (except for ultra-low interest rates; the Fed’s nowhere near raising them.) What’s pushed the recovery along this past year has has been government intervention, massive stimulus spending, massive inducements to consumer spending, massive monetary easing. It’s all been temporary, however, and as various programs dissipate, the real economy is left to do the heavy lifting. There are indications it isn’t up to that job.