Double dip recession? Where has all this negativity in the media come from?

Economic Growth

It can’t have escaped your attention that the moment any economic news comes out at the moment the media seem to take a negative view that this could be the start of a double dip recession. I don’t understand where all this negativity has come from?!

It seemed to start a few weeks ago with news about house price rises slowing. This was then jumped upon by the media as a sign of dark clouds on the economic horizon. Personally I see this as natural after a long recession – many people have held onto their homes waiting for the “green shoots” of recovery to then put their homes on the market. Its simple supply and demand – the demand is there but now there is much more supply than there was 6 months ago and this has flattened out any house price rises.

Even today I read on the BBC website about how the Bank of England has downgraded estimates for economic growth in 2011 from 3.5% to below 3%….immediately the media seems to start speculating – does this mean a double dip recession is possible? I don’t understand all the negativity! 2.5% or 3% growth next year is still growth! After the credit crunch of the last few years it will always take time to recover to “normal” economic conditions and with cuts in the public sector due to be unveiled by the end of October a flattening of growth predictions for next year could always be expected. This however doesn’t automatically mean all areas of the economy will slip back into recession!

Without sounding too technical the definition of a double dip recession is “When gross domestic product (GDP) growth slides back to negative after a quarter or two of positive growth. A double-dip recession refers to a recession followed by a short-lived recovery, followed by another recession” (definition from investopedia.com) – I don’t see that definition mention anything about 3% or even 1% growth being a recession!?

In my role as Regional Manager at Project Resource I have seen recruitment (always a good barometer for economic conditions) across the construction industry improve steadily throughout 2010 and I definitely expect this to continue into 2011. Has it dramatically improved? No but it has consistently and steadily improved throughout 2010. Perhaps slow and steady recovery just isn’t news worthy and that’s why the media have to make things sound so dramatic!?

What do you think? As always I am keen to hear your thoughts