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A 'double-dip' recession looms large — here's what this economist predicts

Brian Sozzi
·Editor-at-Large
·3 min read

The U.S. economy may be poised later this year to undertake the same action as many chicken wing holding people do at a Super Bowl party.

Embark on that dreaded double-dip, as consumers tighten up on their finances ahead of the presidential election and struggle to make ends meet absent a fresh round of government stimulus.

“As a matter of fact, we at The Conference Board do predict that while in the third quarter we will see the economy recover further, the fourth quarter will actually show a slight dip. There, we are really below consensus that assumes the recovery will continue,” explained Conference Board chief economist Bart Van Ark on Yahoo Finance’s The First Trade.

Van Ark says he sees a 1% to 2% GDP drop in the fourth quarter.

Talk on Wall Street has picked up this month on the prospects of a double-dip U.S. recession. A double-dip recession is usually characterized as one where an economy briefly escapes recession via a snapback in growth, but then quickly returns to negative growth. That technical definition is already taking shape in the country, strategists such as Van Ark argue.

FILE - In this July 13, 2020 file photo, a For Rent sign hangs on a closed shop during the coronavirus pandemic in Miami Beach, Fla. Having endured what was surely a record-shattering slump last quarter, the U.S. economy faces a dim outlook as a resurgent coronavirus intensifies doubts about the likelihood of any sustained recovery the rest of the year. (AP Photo/Lynne Sladky)
FILE - In this July 13, 2020 file photo, a For Rent sign hangs on a closed shop during the coronavirus pandemic in Miami Beach, Fla. Having endured what was surely a record-shattering slump last quarter, the U.S. economy faces a dim outlook as a resurgent coronavirus intensifies doubts about the likelihood of any sustained recovery the rest of the year. (AP Photo/Lynne Sladky)

The U.S. entered into a recession in February due to the COVID-19 pandemic as dated by the National Bureau of Economic Research in June. U.S. GDP plunged 32.9% in the second quarter, the worst-ever on record. The Street predicts U.S. GDP rallied back hard in the third quarter to the tune of 20% as households spent stimulus checks and employers brought workers back. Growth is seen rising modestly in the fourth quarter then leveling off to 5% or so in 2021.

But with stimulus waning, spending could very well fall off a cliff in coming months and surprise Wall Street. The realists on the Street received new fodder for their call on Tuesday. Consumer confidence this month tanked to a new pandemic low according to The Conference Board, and badly missed Wall Street estimates.

Stocks — which are hovering around records (and clearly ignoring Main Street’s struggles) quickly sold off in early trading on the news.

“The main point that we want to make is this idea that the recovery will just continue [isn’t correct], that it may perhaps slow down a little bit,” Van Ark says.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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    (Bloomberg) -- Intel Corp. was told to pay VLSI Technology LLC $2.18 billion by a federal jury in Texas after losing a patent-infringement trial over technology related to chip-making, one of the largest patent-damages award in U.S. history. Intel pledged to appeal.Intel infringed two patents owned by closely held VLSI, the jury in Waco, Texas, said Tuesday. The jury found $1.5 billion for infringement of one patent and $675 million for infringement of the second. The jury rejected Intel’s denial of infringing either of the patents and its argument that one patent was invalid because it claimed to cover work done by Intel engineers.The patents had been owned by Dutch chipmaker NXP Semiconductors Inc., which would get a cut of any damage award, Intel lawyer William Lee of WilmerHale told jurors in closing arguments Monday. VLSI, founded four years ago, has no products and its only potential revenue is this lawsuit, he said.VLSI “took two patents off the shelf that hadn’t been used for 10 years and said, ‘We’d like $2 billion,”’ Lee told the jury. The “outrageous” demand by VLSI “would tax the true innovators.”He had argued that VLSI was entitled to no more than $2.2 million.“Intel strongly disagrees with today’s jury verdict,” the company said in a statement. “We intend to appeal and are confident that we will prevail.”Intel fell 2.6% to $61.24 in New York trading. The stock is up 23% since the beginning of the year.One of the patents was originally issued in 2012 to Freescale Semiconductor Inc. and the other in 2010 to SigmaTel Inc. Freescale bought SigmaTel and was in turn bought by NXP in 2015. The two patents in this case were transferred to VLSI in 2019, according to data compiled by Bloomberg Law.VLSI lawyer Morgan Chu of Irell & Manella said the patents cover inventions that increase the power and speed of processors, a key issue for competition.‘Willful Blindness’Federal law doesn’t require someone to know of a patent to be found to have infringed it, and Intel purposely didn’t look to see if it was using someone else’s inventions, he said. He accused the Santa Clara, California-based company of “willful blindness.”The jury said there was no willful infringement. A finding otherwise would have enabled District Court Judge Alan Albright to increase the award even further, to up to three times the amount set by the jury.“We are very pleased that the jury recognized the value of the innovations as reflected in the patents and are extremely happy with the jury verdict,” Michael Stolarski, chief executive of VLSI, said in an e-mailed statement.Officials with NXP couldn’t immediately be reached for comment.The damage request isn’t so high when the billions of chips sold by Intel are taken into account, Chu said. Intel paid MicroUnity Systems Engineering Corp. $300 million 2005 and in 2011 paid Nvidia Corp. $1.5 billion even though a settlement in that case involved a cross license of technology, he said.“Operating companies are going to be disturbed by not only the size of the award but also the damages theory,” said Michael Tomasulo, a Winston Strawn lawyer who attended the trial. “They more or less seemed to have bought the entire VLSI case.”The damage award is about half of Intel’s fourth-quarter profit. The company has dominated the $400 billion chip industry for most of the past 30 years, though it’s struggling to maintain that position.The verdict is smaller than the $2.5 billion verdict won by Merck & Co. over a hepatitis C treatment. It was later thrown out. Last year, Cisco Systems Inc. was told by a federal judge in Virginia to pay $1.9 billion to a small cybersecurity companies that accused it of copying a feature to steal away government contracts. Cisco has asked the judge for a new trial.The case is among the few in-person patent trials in recent months, with many courts pressing pause amid the coronavirus pandemic. It was delayed a week because of the winter storm that wreaked havoc across much of Texas.Intel had sought to postpone the case because of the pandemic, but was rejected by Albright, a former patent litigator and magistrate who was sworn in as a federal judge in 2018 and has quickly turned his courtroom into one of the most popular for patent owners to file suit.The case is VLSI Technology LLC v. Intel Corp., 21-57, U.S. District Court for the Western District of Texas (Waco).(Updates with VLSI comment in 12th paragraph. An earlier version corrected the spelling of law firm name in eighth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Rocket shares soar more than 70% as analysts eye 'GameStop-esque' short squeeze

    Heavily shorted mortgage provider Rocket Companies saw its stock surge on Tuesday, in an eye-popping move reminiscent of the rallies that powered GameStop and other so-called meme stocks earlier in the year. Shares of Rocket, the parent company of Quicken Loans, closed up 71.2% at $41.60 after being halted several times for volatility. The outsized move puts Rocket among the stocks that have experienced wild gyrations after becoming a focus of investors on sites such as Reddit’s WallStreetBets, where mentions of the company have multiplied in recent days.

  • Warren Buffett says this is how you stay financially healthy in the pandemic

    Buffett has shared these bits of wisdom to protect your money from COVID.