Double Dipping

There has been much talk lately of the possibility of a double-dip recession, especially after NYU economist Nouriel Roubini, Dr. Doom himself, warned of such a possibility last month. A double dip is one in which the economy recovers from a recession and returns to growth, but then begins to contract again after a quarter or two.

It's probably premature to talk of such a thing, since we're not even sure the economy has begun growing again. But it might be instructive to look at the last double-dip recession, back in 1980-82. The American economy contracted violently in the second and third quarters of 1980, then posted two strong quarters before falling back into recession. What's scary about that one is that the economy didn't really start growing again until the end of 1982. The second part of the double dip ended up being longer than the first part.

There was also a nasty sort of double dip in the Great Depression; while we tend to think of it as one long era of misery, the economy had started to expand again in 1933, only to snap back into recession in 1937. But technically, those were separate recessions and not really part of a double dip.

So it's a very rare occurrence - but if it does happen, after a recession that has already been the longest since the Depression, it promises to be exceedingly nasty.