The beginning of the month is usually positive for stocks, as pension and other automatic savings plans pour into the market. However, that wasn’t the case for September, as Friday’s employment report makes very likely that the U.S. economy-- and perhaps the world economy -- is heading for a double-dip recession.
Last time the U.S. experienced a double-dip recession was back in 1981-82, and it was ugly both for Wall Street and Main Street. Unfortunately, this time around things may be worse for the U.S. as economic policy, especially monetary policy, is maxed-out. For instance, in 1982 short-term interest rates were around 16 percent, while this time around they are near zero. This means the economy cannot count on lower rates to recover, as was the case in 1983-84.
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