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July 27, 2021

Do you fear the double-dip recession?

It’s the economic fear above all else: the double-dip recession.

951860_stress_v_2 Indeed, for all the progress we’ve made since 2008 – the jobs we’ve created, the careers we’ve restored, the finances we’ve repaired – there’s long been an unspoken cloud lingering over it all. What happens if this whole thing falls apart again?

And, to be sure, no one can agree on anything. The latest on the prospect of a double-dip recession – defined as another downturn following economic expansion that lasted less than two years – has come from the CIBC, who said Tuesday that everyone’s financial nightmare is “unlikely” to happen.

“We’re not in material danger of a rude double-dip in the next two quarters,” CIBC’s chief economist, Avery Shenfeld, told the Star, addressing recent reports that the odds pointed to another Canadian recession.

Those reports, of course, were in response to Gluskin Sheff and Associates’ chief economist David Rosenberg – or, as he’s more commonly known, the turd in Canada’s punchbowl.

Rosenberg increased the odds of a double-dip Canadian recession to 67 per cent this week (he had them as low as 45 per cent in June), citing government stimulus fades and the contraction in bank lending as reasons for the higher downturn possibility.

The notorious Bay Street suit’s predictions caused Shenfeld to respond Tuesday, and so it goes with the prospect of a double-dip recession: he said this; she said that; no one really knows for sure

And across the globe, bankers can agree on even less. U.S. consumer confidence dipped to its lowest levels since February last month, hinging on job fears and the nightmare of another dip in mass layoffs and sapped consumer spending.

On the other hand, China – another of the world’s largest and most important economies – announced Tuesday they see “little risk” of a double-dip happening on their side of the globe.

So maybe the lesson to be taken from all this isn’t “no one knows,” it’s “temper your short-term expectations.”

In Canada, even those like Shenfeld who don’t expect a double-dip to arrive still predict a slowdown over the next half-year. In other words, we may not reach a full-blown second recession, but it won’t exactly be free spending across the country, either.

“It all boils down to the consumer,” Rosenberg acknowledged this week.

Consumers, then, do you fear the double-dip recession?

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...