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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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