LCSN: Recession the sequel: Will the economy fall again?

March 28, 2011. Retrieved online March 28, 2011 from AUTHOR, Las Cruces Sun-News

LAS CRUCES – The slogan for “Jaws 2” teemed with danger: “Just when you thought it was safe to go back into the water.” “Poltergeist II” simply, eerily, stated: “They’re back.”

Just as with the monster or killer or blob of space goo from any bad horror flick, we are left wondering if the Great Recession is really dead. Now, as you settle into your theater seat with a tub of popcorn and a Diet Coke, the coming attractions hit you with sickening footage of rising prices at the gas pumps, jumps in your grocery bill, higher prices for clothes and other products.

Is something lurking just behind your checkbook?

Yes, what had been whispered in hushed tones – as if the very words were an evil incantation – is now gaining a louder voice. “Is another recession on the way?” An understandable question when you realize unemployment is still high.

The economy grew in the final quarter of last year, but there remains a deep sense of unease out there. And, even if you have the money to shop for cars, houses, etc., you might want to just sit tight until you see where we are headed. I can’t blame you, but inaction does the economy no good.

Economist Chris Erickson, who teaches at New Mexico State University, says we should not panic, but he understands a wary approach.

“The chance of a recession in the next year is low,” Erickson told me. “(But) the major risk factors would be a sharp rise in the price of oil. And should Congress move to aggressively balance the federal budget, that could also cause a slide back into recession.”

Jim Peach, Erickson’s colleague at NMSU, admitted that the recovery has not been very strong.

“Two things worth being concerned about are: The labor market has not recovered from the last recession; the housing markets have not recovered from the last recession. Both of these factors are an indication of a less-than-strong economic recovery,” Peach said.

Both economists said that, due to rising oil prices, things could get hairy.

“Oil prices above $100 per barrel sustained over several months is a worry,” Erickson said. “At $150, oil prices become a real concern.” Still, neither believes such a rise would throw us back into another recession.

Read the Las Cruces Sun-News article.

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