It's likely that the US economy, bad as it is, will get a lot worse if this week's US GDP figures are anything to go by. According to the latest stats, growth in the world's most powerful economy has flat-lined and is running at a paltry 1.3 per cent. The first quarter was revised down to just 0.4 percent. All this coincides with US lawmakers facing a weekend of negotiations to get some sort of deal that would avoid a potential federal default next week. But the GDP figures suggest that the double dip recession might have begun.
Then again, maybe the recession never ended. The most powerful argument for that is US unemployment. 14 million are out of work and that's reshaping the American psyche. In America, it was usually the case that you would only be out of work for three months. Now there are people who have gone without a job for years.
Business Insider presents signs that the double dip recession has already begun: inflation is gathering a head of steam, investments are not delivering the same sort of returns, auto sales have tumbled, soaring oil prices, a roaring US budget deficit, the economy of China, which has always had a massive appetite for raw materials, is slowing, lack of access to credit from banks and a dysfunctional housing market where many US home owners owe more on their property than what it's worth.
If the GDP data tells us anything, the spending cuts lawmakers are planning are going to do more harm. Consumer spending is weak but there does not seem to be any political will to stimulate demand. Whatever comes out of Congress is going to make it a lot worse.
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