Double-dip recession

A number of economic indicators, news analysts and economists are predicting a second recession in the near future.

The Weekly Leading Index (WLI), created and published by the Economic Cycle Research Institute, has been known for its prediction of economic downturns and recoveries since it was publicly released in 1967. 

On Aug. 20, the WLI reported a growth index of -9.9, the 12th consecutive week of negative growth.

"The published index has never dropped to the current level without the onset of a recession," experts wrote on Dshort.com, a Web site dedicated to plotting and analyzing indexes like the WLI.

However, the WLI has turned up false indications of a double-dip recession in the past, most notably after the brief 2001 recession. In October 2002, less than a year after the recession, the growth index dropped to -5.0, but the economy bounced back soon after.

Junior international business major Michelle Chan knows to take economic predictions like the WLI with serious caution. "While this chart doesn't absolutely convince me on the state of the economy, it influences how cautious I'd be if I were investing," Chan said. "It's a somber reminder."

Even with the looming possibility of another recession, Chan is determined to stay focused. "As students, our highest priority is to do well and do the things that will make us the best candidates for the job market," she said.

Dr. Howard Frank, professor of management sciences and former dean of the business school, understands that nobody knows for sure what's going to happen. Frank noted that there isn't much place for the economy to go but up, and that during the long recession people started saving more and may begin spending their money soon.

"If there's a growth in the economy, it's going to be consumer-led," said Frank. He also highlighted the automobile market as a part of the economy that has improved, if slightly.

"I think people are going to be forced to start buying cars very soon," said Frank.  He continued to say General Motors' recent profitability and Chrysler's weathering of the economic storm are two improvements over last year's outlook.

Frank said a double-dip recession is unlikely.

"When everything is in the tank," he said, "you know something's going to come out."