The New York Times says it very well could occur. “If this is the beginning of a new double dip, it will have two significant things in common with the dual recessions of 1980 and 1981-82. In each case the first recession was caused in large part by a sudden withdrawal of credit from the economy. The recovery came when credit conditions recovered.”
“And in each case the second recession began at a time when the usual government policies to fight economic weakness were deemed unavailable. Then, the need to fight inflation ruled out an easier monetary policy. Now, the perceived need to reduce government spending rules out a more accommodating fiscal policy.”
Reuters: “President Barack Obama on Friday will propose a $120 million package of new tax credits for businesses that hire U.S. veterans returning from Iraq and Afghanistan at a time of stubbornly high unemployment at home.”
A new CBS/New York Times poll shows President Obama with a 48%/47% approval rating overall, 46%/47% on his handling of the debt ceiling. But Congress is at its all-time low with just a 14%/82% approval rating. And House Speaker John Boehner also took at hit with just a 30%/57% approval rating, down from 32%/41% in April.
Scrutiny on Bernanke: “Chairman Ben S. Bernanke and his Federal Reserve colleagues are preparing to meet next week as two-year Treasury yields at a record low signal a U.S. economy on the knife’s edge between growth and contraction,” Bloomberg reports. “Guiding their assessment of the outlook for the world’s largest economy will be forecasts contained in the so-called Teal Book, a confidential staff report with a blue-green cover. Policy makers’ confidence in those forecasts may be tempered as the course of the expansion has confounded their expectations.”
Ironic good news at the pump: “Oil fell to the lowest in eight months in New York, set for the biggest weekly decline since May, on speculation fuel demand will falter as U.S. economic growth stalls and Europe’s debt crisis worsens,” Bloomberg notes.
“Defense Secretary Leon Panetta on Thursday signaled that the Pentagon will push hard against future spending cuts, saying that up to $500 billion in cuts that could come later this year would be a ‘doomsday mechanism’ that would endanger national security,” Politico says.