Tuesday, 19 Oct 2010 11:24 AM
By: Forrest Jones
The U.S. economy is leaving its recovery period and is set to
enter an expansionary phase, and it won’t double-dip back into a
recession, according to global financial giant Deutsche Bank.
Since 1947, the United States gross domestic product has never
double-dipped into a recession before growing beyond its
pre-crisis levels first, says Deutsche economist Carl
Riccadonna.
“Since we are not projecting the economy to cross into expansion
until Q4-2010/Q1-2011, it would be unprecedented for the economy
to relapse into contraction in the meantime,” Riccadonna says,
according to Business Insider.
“This follows logically, because recessions typically lead to a
correction of imbalances, such as excessive inventory levels,
abnormally low household savings or overinvestment in housing or
[capital expenditures].”
Furthermore, a double-dip is unlikely even well into 2011.
“As the recession subsides, the newly rebalanced economy
subsequently has greater resilience as the next cycle begins,”
Riccadonna says.
Fears of a double-dip recession, often described as when an
economy contracts, recovers and then contracts again, have
grabbed headlines over the past couple of years, although many
others have also rejected the notion, including Jamie Dimon, CEO
of JP Morgan Chase.
“The American economy may be stronger than people think,” Dimon
tells Fortune.
“At the root of my optimism is the sense that the embedded
strengths of this country — a lot of which reside in its
business — are still here. We work hard, we are innovative, we
adapt quickly.”
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