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New Recession Risk

Last year economist Lakshman Achuthan said he thought the United States had emerged from the depths of a recession, but today the picture looks a bit more grim. Unemployment is hovering above nine percent and there were no new jobs created in August. On top of that, consumer confidence is at its second-lowest level of the year.

In response to the grim news, Achuthan told Guy Raz, host of weekends on All Things Considered, "we are skating on very thin ice."

Caution: economy slowing ahead

It is Achuthan's job to make economic predictions for the Economic Cycle Research Institute. And he says all of his economic indicators point to more economic sputtering ahead.

"The risk of a new recession is quite high," he says.

And if we do have a double dip recession, Achuthan says the people who are already having trouble finding work and paying bills "are going to suffer more."

"That is a depression for that cohort [...] And it poses massive problems for policy makers because a new recession automatically increases all of these expenditures out of the public sector while at the same time dramatically decreasing all of their revenue. So there's even less ability to help the people who are hurting the most."

This time is different

Some economists argue that we are just in a period of slow growth right now, not unlike that of the early 1980s. They say there are signs of a turnaround in the near future. Achuthan argues there is no evidence to support that point of view.

"This is very different than the early 1980s, he says. "What we're living through and dealing with now has been building for decades. If you look at the data, you see that the pace of expansion has been stair-stepping down ever since the 1970s, on all counts — on production, how much can we produce, how many jobs can we create, how much money do we make how much do we sell? These are all trending down."

So, Achuthan concludes, "those who were expecting to have a vigorous recovery had no right to do so."

In fact, he says it is likely that we will see more recessions than anyone is used to for the next five or ten years.

"The best news I can give you is that cycles do turn, but there is going to be a lot of pain in between," he says.

In July 2010 Lakshman spoke with NPR about how the challenges facing the economy predated the 2007-09 Great Recession. Listen to that explanation of why we’re now in an era of more frequent recessions.

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