The much-used term double-dip recession comes under the chairman’s withering gaze. How can we be heading for another dip when we have barely managed to crawl out of the last one?
”Could you tell me the actual definition of a ’double-dip recession’?” I asked the chairman of the implausibly-sized investment company Second Coming Asset Management as we enjoyed a few pints of Agreement On Harmonising Our Respective Managed Sectors at The On The Whole Looks A Lot Like Just Going With The ABI’s Versions.
“Oh come on,” the chairman laughed. “How long have you been in this business – 20 years or something?” “Sometimes it feels like it,” I sighed. “Although it’s actually a lot closer to 15.”
“Well, even so,” said the chairman. “And you still don’t know what a double-dip recession is.” “No,” I replied. “Perhaps the clue was in the bit where I asked you what
“Well, if we are going to be snotty, perhaps the clue to the definition of a ’double-dip recession’ is in the ’double-dip recession’ bit,” replied the chairman. “Not to be too technical, we dip into recession, pop back out of it and then dip back in again – you know, making the dip element not so much a single as a double.” (Scam continues below)
“I’m not buying it … ” I began. “What a surprise,” interrupted the chairman. “I’ve never witnessed you buy so much as a single, let alone a double.” “Oh very good,” I nodded. “Aren’t we on spiky form today? But what I mean is I am not buying that as a proper economic definition – although concede it is no less woolly than any other one knocking around.
“My point is, how long does there have to be between the two dips of a double-dip recession before it becomes just two separate recessions? Casting around for guidance on this, you tend only to find ideas such as a double-dip being ’when GDP growth slides back to negative after a quarter or two of positive growth’ or ’a recession followed by a short-lived recovery followed by another recession’.
“You see? It is always so imprecise – a ’quarter or two’ here, a ’short-lived recovery’ there. I would go so far as to bet you the next round there is no single gold-standard, textbook, dare one say definitive definition of a phrase that is beginning to take over our lives and certainly our media to a most unnerving degree.”
“Steady on,” warned the chairman. “One shouldn’t go bandying about high-level wagers like the next round willy-nilly. Honestly, do you really think a body as august as the Organisation for … Organisation for Economic … er … OECD would warn the UK was on the verge of a double-dip recession if it was not a real thing?”
”How long does there have to be between the two dips of a double-dip recession before it becomes just two separate recessions?”
“Of course I do,” I said. “They are economists – wooliness is pretty much in their job description. What is more, the UK being on the verge of a double-dip has to be about the most questionable idea of the lot, bearing in mind every quarterly GDP growth figure of the last few years has been dribbling a basis point or three above or below zero.
“Call it whatever technical term you want but we are really just in the same old mess we have been since 2008. And shall I tell you another thing?” “Do I have a choice?” sighed the chairman wearily. “No,” I said. “My other theory on this is that when most people talk about double-dips they aren’t even referring to economic growth anyway.
“Double-dip is basically a visual idea, isn’t it? Yet I defy any reasonably normal person to visualise the ups and downs of, say, global GDP growth over the last three years. Whereas if they had to sketch out the path of the global stockmarket in that time, I bet they could give it a shot. See what I mean? Most people are really just projecting double-dips onto stockmarkets and … “
“Oh no,” groaned the chairman suddenly. “What?” I said. “Hey, I know I got onto a bit of a roll there but there was almost the germ of an interesting point.”
“Oh, it’s not that,” sighed the chairman. “I’ve just realised it is about this time in the cycle that economists start talking about ’V’, ’W’, ’L’, ’M’ and who-knows-what other-shaped letters of economic trajectories and then things get really dull.”