Double-Dip Recession On The Way?
Today in Beijing, Barack Obama warned of a so-called double-dip recession. According to Obama, if government debt was to climb too high, it could lead to another recession. With rising US deficits, Obama told Fox News today that the White House “faces a delicate balance of trying to boost the economy and spur job creation while putting the economy on a path toward long-term deficit reduction.”
With a current unemployment rate of 10.2% in the United States, the administration is mulling over the idea of instituting various tax incentives that could encourage businesses to hire new employees sooner than later. However, Obama said:
“I think it is important, though, to recognize if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the US economy in a way that could actually lead to a double-dip recession”.
The budget deficit has gone past $1.4 trillion, which is roughly 10% of the total economic output of the 2009 fiscal year. This can mostly be blamed on the bailouts and public spending project designed to drag the US out of the recession.
China has also raised some concerns about the spending by the US government, as they are the largest foreign holder of US debt.
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