One Lump or Two?

Will the United States suffer a "double-dip" recession?

By Daniel Gross
Posted Thursday, June 3, 2010, at 2:01 PM ET

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In the past month, several unfortunate phrases have joined the lexicon, including "top kill," "Gore divorce," and "double-dip recession." On the May 21 Today show, CNBC's volatile James Cramer increased his odds of the econo­my suffering a relapse from 25 percent to 35 percent. At a mid-May investment conference, Robert Arnott, chairman of money manager Research Affiliates, predicted that "there's a better than 50 percent chance that we will see a second dip in the economy." Google searches for "double-dip" have spiked.

And why not? GDP grew at a 3 percent rate in the first quarter, down sharply from 5.6 percent in the 2009 fourth quarter. The Conference Board Leading Economic Index (LEI) fell in April by 0.1 percent, the first downturn since March 2009. The debt crisis that began in Athens is threatening to tear the euro zone asunder. (Beware of Greeks bearing rifts!)