A Double Dip Recession – Odds Rising?

Baseline scenario is for continued — albeit moderating growth — at least according to the WSJ November survey. However, the reality of rapidly ascending Covid-19 caseload, hospitalization, and fatality rates may force a quick rethink. From The Hill today:

A sharp spike in COVID-19 cases across the U.S. is threatening the economic recovery and increasing the odds of a double-dip recession.

Economists across the political spectrum have consistently warned that sustained growth is dependent on getting the coronavirus under control, with many now viewing the rise in infections with heightened concern.

“Everything that is happening now, the risk of a resurgence in COVID-19 as well as policymakers walking away from stimulus negotiations — those two factors are what my team had feared would happen,” said [Beth Ann] Bovino [Chief economist of S&P Global].

“It wouldn’t be as large [a decline] as what we experienced in the first half of the year, but it would be a double dip,” Bovino said.

The WSJ November survey reported only one forecast W-like:

Figure 1: GDP as reported in 2020Q3 advance release (black), James Smith/Economic Forecaster LLC (red), Robert Dietz/National Assn of Home Builders (green), Amy Crew Cutts/A.C. Cutts & assoc.  (pink), all in billions Ch.2012$, SAAR, on log scale. Source: BEA, 2020Q2 3rd release, October WSJ survey, and author’s calculations.

Conventional macroeconomic indicators lag too much to show an incipient slowdown. Forward looking indicators suggest a softening in consumer sentiment.

Figure 2: Nonfarm payroll employment, 000’s, s.a. (blue, on left log scale), University of Michigan Sentiment Index-Future (brown, right scale). November figure is preliminary. Source: BLS via FRED, U.Mich., and NBER.

In my view, the decline in sentiment is unsurprising given the catastrophic failure in pandemic management.

Figure 3: Baseline projection of 12 November 2020. Source: IHME, accessed 11/15/2020.

By the way, the “W” might not show up in quarterly GDP, but rather in monthly indicators…

Update, 11/16, 11:15am Pacific:

CDC ensemble indicates rising fatalities as well. Projections (weekly) below:

Source: CDC, accessed 11/16.

Update, 11/16, 3pm Pacific:

Source: DB Fed Watcher, November 16, 2020.

60 thoughts on “A Double Dip Recession – Odds Rising?

  1. Dr. Dysmalist

    At my place of employment, in-store traffic is slowly dropping except for special events. Many people are talking about having smaller Thanksgiving celebrations, and I’ve overheard a not insignificant number discussing smaller Christmas expenditures in favor of setting money aside for hard times ahead. And this was before our governor reimposed some (very modest) restrictions. People around here are even hoarding toilet paper again!

    People are becoming alarmed again – they’re acting that way, too. Anyone who argues that government action is driving a slowdown is either deluding themselves or lying to themselves and to everyone else.

    To quote (again) another commenter here, the virus is in charge.

    1. macroduck

      The risk of a Q4 contraction is pretty highly dependant on retail sales, ex-auto. Here’s the chart. Hit “edit graph – modify frequency – quarterly” to get a clear picture.

      Substantial inventory catch-up in Q3 could add to risk.

  2. ltr

    November 15, 2020



    Cases   ( 11,367,214)
    Deaths   ( 251,901)


    Cases   ( 8,845,617)
    Deaths   ( 130,109)


    Cases   ( 1,981,827)
    Deaths   ( 44,548)


    Cases   ( 1,369,318)
    Deaths   ( 51,934)


    Cases   ( 1,003,253)
    Deaths   ( 98,259)


    Cases   ( 802,944)
    Deaths   ( 12,692)


    Cases   ( 296,077)
    Deaths   ( 10,953)


    Cases   ( 86,338)
    Deaths   ( 4,634)

  3. ltr

    November 15, 2020

    Coronavirus   (Deaths per million)

    UK   ( 764)
    US   ( 759)
    Mexico   ( 759)
    France   ( 682)

    Canada   ( 289)
    Germany   ( 151)
    India   ( 94)
    China   ( 3)

    Notice the ratios of deaths to coronavirus cases are 9.8%, 3.8% and 2.2% for Mexico, the United Kingdom and France respectively.

  4. ltr


    November 16, 2020

    Chinese mainland reports 8 new COVID-19 cases

    The Chinese mainland registered 8 new COVID-19 cases on Sunday, all from overseas, the National Health Commission announced on Monday.

    A total of 14 new asymptomatic COVID-19 cases were recorded, all from overseas, while 548 asymptomatic patients remain under medical observation. No COVID-19 related deaths were reported on Sunday, and 19 patients were discharged from hospitals after recovering.

    As of Sunday, the total confirmed COVID-19 cases reached 86,346, with 4,634 fatalities.

    Chinese mainland new imported cases


    Chinese mainland new asymptomatic cases


    [ There has been no coronavirus death on the Chinese mainland since May 17.  Since June began there have been 5 limited community clusters of infections, each of which was contained with mass testing, contact tracing and quarantine, with each outbreak ending completely in a few weeks.

    Imported coronavirus cases are caught at entry points with required testing and immediate quarantine.  Asymptomatic cases are all quarantined.  The flow of imported cases to China is low, but has been persistent.

    There are now 374 active coronavirus cases in all on the Chinese mainland, 3 of which cases are classed as serious or critical. ]

  5. pgl

    Moderna stock is taking off of late. Some are hoping that we can have vaccines in 10 million people by year end. Of course we would still have 320 million people without vaccines. We need to get the production and distribution ramped up ASAP. But it seems Team Trump still refuses to talk to Team Biden and Trump himself is solely interesting in whining on Twitter and golfing.

    1. Barkley Rosser

      The Moderna one looks better than the Pfizer one that got so overhyped last week. It only needs -4 deg F to store rather than -94 deg F, and can apparently be left outside for about 12 hours. Reportedly some others that may be about to appear are even better, no cold storage and requiring only one shot. We shall see.

      In the meantime, whichever vaccines ultimately become most useful and available, for sure getting Trump to accept defeat and allow a proper transition is becoming increasingly important.

      1. pgl

        The more effective vaccines the better. The key now is to get moving quickly on production and distribution. Which is why the transition needs to be facilitated NOW!

      2. Ivan

        The temperature issue is commercial hype from Moderna. We easily have the infrastructure to ship millions of packages on dry ice. You just keep them stored in the shipping box – and use them within 3-5 days of arrival. No big deal – just a little organization and coordination. For the first 400 million doses we don’t want or need on-site storage. We want people to be injected as soon as the vials arrive.

        1. macroduck

          Something harder vs something easier matters nearly always. Moderna has the advantage of lower shipping and storage cost and risk. That is completely clear. Capacity constraints may not turn out to be binding, but in many other aspects of the Coronavirus response, capacity constraints have been a serious problem. If there are shipping and storage constraints, Moderna’s advantage will be important to public health.

          1. Alan Goldhammer

            The big problem with the mRNA vaccines is whether they can be produced at scale, reproducibly. It’s a new technology and what can go wrong might very well go wrong. AFAIK, Moderna is outsourcing all of its manufacturing and I don’t think this is the case with Pfizer. Pfizer is handling all of the shipping logistics. The AstraZeneca/Oxford vaccine will be the next one to get authorization but I don’t know how many doses are promised to the US. Johnson & Johnson (single shot vaccine) and Novavax (the first protein based vaccine with an adjuvant) should be ready early next year. I’m impressed with how fast this has all come together. If the remaining vaccines show similar potency to the Pfizer and Moderna vaccines, we will be in very good shape.

  6. pgl

    I bet lawyers are fully employed wasting everyone else’s time:


    ‘The Trump campaign is very angry that journalists noticed that the Trump campaign has made significant changes to a post-election federal lawsuit it filed in Pennsylvania. President Trump himself, along with top members of his campaign and legal operations, raged on Twitter about Washington Post and Politico reports explaining how the lawsuit had been scaled down.’

    Read the conflicting BS and total waste of time coming from Rudy Giuliani and his ilk. Rudy reminds me of a retarded dog chasing his own tail!

      1. Barkley Rosser

        WaPo reports this morning on its front page that federal employees appointed by Trump are taking time off from their jobs to search for voter fraud. He seems not be giving up, and they seem to be preparing yet more silly suits. What may really bring this nonsense to an end is judges finally cracking down and throwing an attorney or two into the slammer for contempt of court. Sooner for this would be better.

      2. macroduck

        Follow the money. Trump does.

        If he thinks lawyer money will pay a return, he’ll pay lawyers. If not, he’ll raise “lawyer” money and spend it on something else.

      3. Alan Goldhammer

        The one thing nobody is looking at is the amount of voter fraud from the Republicans. Maybe all the polling misses are a result of massive fraud on that side and the Trump statements and lawsuits are a classic misdirection ploy. Perhaps the Democrats did much better in the Senate and House races that is apparent.

        This goes to show that conspiracy theories can be just as good on both sides!!! 🙂

  7. JohnH

    Consider also that spending is down in a number of other areas. The bursts of census and of election year political spending are over. State and local governments have to cut spending. The effects of Federal stimulus are waning. Commercial bank lending is down. Multipliers are primarily domestic.

    Lots of yellow lights flashing.

    1. pgl

      You are NOW against stupid fiscal austerity? Cool! But who was that JohnH that kept praising Cameron’s UK fiscal austerity during the Great Recession?

      1. JohnH

        Funny how you can’t add a comment that addresses the question posed here—a double dip recession?— without pgl going on the attack!,,

        1. pgl

          Same old boring JohnH. Look – admit you screwed up back in the day. But as many stupid comments as you have made you never own up a one of them. HEY – could JohnH be Donald John Trump?

          1. JohnH

            As long as we’re talking history, let’s not forget that pgl staunchly defended Obama and his austerity budgets, first proposed in 2011. And he never tired of defending Krugman, who repeatedly praisedObama’s economic performance, despite household incomes that had stagnated at 1980s levels for most of Obama’s terms.

            Of course there was Republican obstruction, but Obama seemed quite content to have a policy of benign neglect towards the working class, and supporters like pgl could never abide any criticism of Obama.

            And so we got Trump. And Democrats remain absolutely clueless—it’s the economy, stupid. And among their other problems, Democrats still have no coherent and credible economic message that addresses the grievances of the working classes!!!

          2. pgl

            You are Donald Trump!

            November 16, 2020 at 12:54 pm
            As long as we’re talking history, let’s not forget that pgl staunchly defended Obama and his austerity budgets, first proposed in 2011.”

            That was a lie then and it still is a lie. I guess we will go back to those Birther claims and whining about how Hillary was mean to the Donald.

            Folks – JohnH is a total waste of time. He has been for a decade and I guess it will never stop.

          3. JihnH

            Kurtttner, 2013: “ Why are we losing the politics? For one thing, the Wall Street view of austerity reaches deep into the Democratic Party. President Barack Obama and his advisers are still convinced that we need those trillions in budget cuts. That makes his rhetoric about infrastructure spending and other serious uses of public resources hollow if not cynical. ”

            Of course, pgl is in denial…about Obamausterity and about how BO’s benign neglect of the economic problems of the working classes paved the way for Trump.

            Look for a repeat from Biden, with pgl’s full throated support.

          4. Barkley Rosser


            I guess this should not be left standing.

            Yes, it is true that Obama (and probably Biden also) overly went along with the unwise austerity push in 2011.

            But times have changed. Biden along with Pelosi are now clearly not as tied to austerity as McConnell. Trump has not cared about austrity, but his deficit increasing policies cannot be argued to be pro-working class, see his tax cut, which helped the rich and did little to stimulate the economy.. Biden has many policies that will help the working class. This is not 2011 or2013.

  8. 2slugbaits

    I do not understand how it is possible for GDP to approach pre-pandemic levels as long as a significant portion of the potential labor force is sitting on the sidelines. The facts are that former workers (by and large women) appear to be withdrawing from the labor force in lieu of childcare duties. That will remain true until 2021Q2 or 2021Q3 at the earliest. Average hours worked have already increased to pre-pandemic levels, so I don’t know where the additional labor power will come from. This isn’t just an aggregate demand problem, it’s also a labor supply problem only made worse by anemic pre-pandemic investment growth.

    1. pgl

      It can be both a supply side and a lack of aggregate demand issue at the same time. We need a smart approach to this pandemic and start fiscal stimulus at the same time. Of course neither is happening under Trump and I have my doubts about the Senate until someone puts Senator Turtle back into his cave.

    2. Bruce Hall

      2slug, this would certainly keep the economy humming… the Federal government would simply print more money. I seem to remember that being tried elsewhere. https://www.cnbc.com/2020/11/11/biden-covid-advisor-says-us-lockdown-of-4-to-6-weeks-could-control-pandemic-and-revive-economy.html

      So, in this proposed national lockdown, would everyone have two weeks to buy all of the food and supplies they need? We certainly can’t have people running around stores and delivering things.

      1. pgl

        #1 in the worst of NYC’s weeks, I had no problem going to my local grocery story early in the morning. #2 – Amazon delivers all sorts of food and other supplies. What da matter Brucie – did you mommy not teach you these simple tricks?

      2. pgl

        A big celebration for a first for this comment section. Bruce Hall managed to find a story about honest discussions from smart people. I guess even Brucie realizes that Kelly Anne Conway is about to become unemployed and incapable of paying Brucie for the usual Alternative Facts! Hey Brucie – go back and read your link over and over. Maybe you will finally get it!

      3. 2slugbaits

        Bruce Hall A nationwide lockdown is a last resort. The point of smart planning is to avoid having to take those kinds of drastic measures. But we should be targeting superspreader sectors like bars, restaurants, salons and gyms. That means putting people out of work for a while. The good news is that as an economic problem it’s a no brainer. If only all our problems were that easy to solve. The solution to lost income is to have the government write checks. Check out Menzie’s posts on interest rates. If you believe in markets, then it’s time to take market signals seriously. The markets are thirsty for more government debt. Demand for government securities exceeds the supply. This is one of those times when we should ignore concerns about the deficit. Why? Because markets are begging us to ignore deficits.

        If you’re worried about panic buying, then you need to support actions that suppress spread. The shortages we saw last Spring weren’t because of government restrictions.

        BTW, I credit you for having the courage to continue showing up here, unlike a few others that seem to have headed for the hills after Trump’s loss and refusal to recognize reality.

        1. noneconomist

          Bruce needs to get out of Michigan for a while because, well, tyrannical Governor, infringement on freedom, masks, can’t go to a bar and get loaded. We know the drill.
          I would suggest a short stay in freedom loving South Dakota where the governor won’t order masks for everyone like the tyrants in Michigan and North Dakota.
          Those who want to get sick and infect others should have the freedom to do so. No wonder Gov. Noem is solidly on board. She’s clearly Bruce’s kind of leader.

          1. pgl

            Keep in mind that Bruce Hall has hunkered down in his mommy’s basement since St. Patrick’s Day. He actually has his mom go buy his food and booze for him as he is too scared to do it himself.

        2. macroduck

          There have been job cuts for paid trolls, but not a complete shutdown. It would look like an admission of failure.

          There is also probably a redirection of effort. Any public forum which could influence the elections in Georgia are probably full of lying liars, ’cause that’s where the money is. Here, there ain’t much chance of reaching Georgia swing voters.

    3. macroduck

      Potential GDP drag, pure and simple. We are accustomed to focusing on insufficient demand because of the recent prevalence of financial shocks. Supply-side damage is typical as a result of recession, but not as a cause in recent recessions. This time, we have both supply and demand shocks, making it difficult to tease apart the magnitude of the two influences. It is not hard, though, to see that we have suffered a big supply shock.

      Housing demand is a buffer against the demand shock, but unless we build on a 2005/6/7 pace, the housing sector is too small to be a big swing factor. And we had already run into supply constraints in a lot of regional housing markets.

  9. Barkley Rosser

    Yes, it does seem that the chances of a double dip recession are rising. Not only do we have the virus seriously surging with Trump doing zero about it, but it now looks near certain that there will be no further fiscal stimulus. McConnell is going into his total oppo mode to ruin the incoming Biden presidency, so wants a recession and a no good economy for him. Really need to have Dems win those Senate races in Georgia (on my mind), but I fear I am not all that optimistic about it.

    BTW, I note Menzie avoiding calling the pattern of a possible double dip by a letter. Some would say it would be a W, but now we have our dictionary policeman from Down Unider, NT, who insists that even a billiointh of a deviation from a perfect form of a letter means you cannot call a patter by it. And at best if we get a double dip it will be a very wiggliy and wobbly W. So, mate, we shall send all the letters back to your dictionary and stick to approved terms like “double dip.”

    1. JohnH

      McConnell is planning to set the stage for Trump 2.0. That requires having a bad economy in 2022 and 2024–as little stimulus as possible.

      You would think that Democrats could pin the blame on him, but recent history shows that they are ineffective in hearting the concerns of those hit by a poor economy—tone deaf. And even if they could, they couldn’t craft a coherent message.

      Heck, Florida passed a $15 minimum wage with 60% approving, but Democrats couldn’t even leverage the issue, which they should have owned. And so Democrats were losers yet again.

      1. Menzie Chinn Post author

        JohnH: Well, that plan didn’t work out so well in 2009, seeing as Obama was handily re-elected. Given the economy was not suffering from grievous imbalances before Covid-19 struck, a competent administration, reduced policy uncertainty, and an effective vaccine could render moot McConnell’s attempt to sabotage the economy (especially with all the monetary stimulus in the pipeline).

        1. JohnH

          Democrats lost 63 seats in the House in 2010, the largest single election shift in seats since 1948 and the largest midterm election shift since 1938. And this was even before Republican gerrymandering kicked in after the 2010 census. Of course, Obama did win in 2012, wisely relying heavily on his own election organization, not the DNC. The rest of the decade was pretty much all Republican, suggesting that their deficit hawking, growth stifling strategy was pretty effective, particularly since Democrats had no coherent or effective economic response.

          Though there may be a lot of monetary stimulus in the pipeline, the experience of the past decade puts its effectiveness into question, especially without significant fiscal stimulus. Of course the Fed did prove its effectiveness in 2008 by preventing a catastrophe.

          1. macroduck

            Democrats had picked up 21 seats in 2008 and as a result held the largest House majority since 1994. Those 21 seats were arguably coat-tail beneficiaries, so vulnerable in the mid-term. And Obama is black. And Democrats tend to skip mid-term elections in greater numbers than Republicans.

            Which is to say it is easy to find reasons other than economic policy and management to account for House Democrats’ 2010 losses.

            Anybody with access to a few political numbers can spin a story. Doesn’t make the story right. More importantly, in a time when political alignments are shifting fast, what happened in the aftermath of a crisis a decade ago is a questionable guide to politics in our current crisis.

        2. pgl

          Menzie – be aware that JohnH is nothing more than a troll who pretends to be a progressive but often pushes rightwing insanity including going back to the gold standard. The more you qualify his hatred of all things Democrat the more BS he comes up with. Best advice perhaps is to ignore him and maybe he will just “wash away” (like the virus was supposed to).

    1. Barkley Rosser

      Sorry, NT, I always said the V was going to stop, my wording being “flatten out,” which it has. Your apparent point seemed to be that the moment of flattening out, stopping rising in a symmetric way after declining sharply, had to very closely coincide with the level that the sharp drop started, so that if one looked from the beginning of the sharp decline to the end of the sharp bounceback, one would get a nearly perfect V like your dictionary would approve of. That the V stops and becomes something else does not mean it was not a V.

      You are now becoming downright dumb, mate, along with anal and annoying. This is just drivel now.

          1. Not Trampis

            Menzie or should I say Chinny,
            I am simply making an unarguable statement.
            A recovery means several quarters of positive growth. It is not a recovery if after one quarter you go back to a negative quarter,
            That aint a recovery anywhere not even in the USA

          2. Barkley Rosser

            Sorry, NT, not going to let you off the hook, although I apologize for getting overly cranky. Things have been more stressful here than Down Under, mate.

            You started your whine about how it was not a V before the question of a double dip arose. You initiallly complained that if the flattening occurred prior to the resembing-a-V recovery got back to the point where the sharp drop started, then it was not a proper V, with you citing an unstated “dictionary definition” of what a V is. It seemed, although you were a bit vague about this despite all your pompous certitude, that if the bounceback did not precisely resemble the decline, it could not be called a V.

            Now we have another post in which Menzie has raised the possibility of a double dip, an actual decline in GDP that might happen, but, let us be clear, has not yet. You are now declaring that it would be the appearance of a renewed decline that would mean that there had not been a “recovery” and certainly not a V-shaped one. You suddenly raise the specter of needing at least two quarters of recovery for it to count.

            Welll, NT, even if there is a double dip, and the dip has not yet appeared with us now just past the halfway point of the fourth quarter, there is a good chance that if you insist on looking at quarter by quarter data, where Moses Herzog will demand that you use SAAR numbers that you hate, there will be two quarters of growth, the third when growth was very rapid, looking like it made a V when compared with the sharply declining second quarter, and then a much more slowly growing fourth quarter (with the end of it possibly in decline), the flattening I long ago forecast and certainly has arrived.

            You are now pushing several questionable points and not looking either consistent or particularly insightful. Do you want to bring in a dictionary to tell us what a recovery is or is t only useful for defining what a V-shape drecovery is?

            I look forward to you having a good time in the Outback so you can come back making more sense than you are now, mate. Enough of playing the drongo, mate.

        1. Barkley Rosser

          What has happened to you, NT? I have had respect for you until now, mate. But you have fallen into a toilet of total stupidity here with this increasingly rank nonsense. You have gone from pettiness to complete shit-for-brains here. Gag.

          Maybe you should go for a run to the Outback and get yourself back to a more reasonable perspective on things.

          1. Not Trampis

            sparkling repartee which avoids the point.
            A recovery that dips is not a recovery even in Trump land!

          2. macroduck

            Not Trampus has a habit of claiming to own the language. If he says a “w” or a “v” means what he says it means, well that’s incontrovertible. Why? Because he said so. Same with annualized data. It’s just wrong, because.

            Which may explain why he seems level-headed at times, disconnected from rationality at others.

            No need to hope for a useful discussion when you tread on NT incontrovertibly.

          3. Barkley Rosser

            BTW, Not Trampis, you may have thought you were being cute calling Menzie, “Chinny,” but on careful consideration, it is not. Indeed it is not. I am fine with being called “Barkes,” mate. But let me note your nickname for Menzie has an annoyingly close similarity to the name for his ethnic background. This may be fine Doun Under, but it is not up here Over the Top, frankly.

            If you want to be totally anal about what things are being called, as you have been recently here, you should be a bit more careful to show proper respect to our host. Maybe chowing down on some roo in the Outback will get you back to being more sensible.

  10. For this reason

    There are differences between now and last spring. Then, the nature and potential of both the virus and of lockdowns were unknown. No we know. This wave is likely to be much more severe – as a virus – than the first.
    However, many businesses and individuals have learned ways to adapt. There is less fear now, I think, that even a severe virus wave will bring economic disaster. There may be slowdowns for some and there will also be increases for others.

    1. pgl

      We in NYC have learned a lot. Now if the rest of the nation would just listen to what we learned. Hopefully now that the Moron in Chief has to leave the White House and let Biden move in – the messaging will become a lot clearer.

    2. macroduck

      Yes. We have learned and adapted. That will mute the economic response to this pandemic up-swing. On the other hand (don’t ya love economics?) this swing is more wide-spread, more rapid and comes in a more dangerous season. Coin-toss.

      Faced with a significant risk of an economic downturn, high uncertainty and low borrowing costs, what does wise policy look like? Honest answers only, please.

  11. ltr

    Latin American countries have recorded 4 of the 11 and 6 of the 19 highest number of coronavirus cases among all countries.  Brazil, Argentina, Colombia, Mexico, Peru and Chile.  Mexico, with more than 1 million cases recorded, has the 4th highest number of cases among Latin American countries and the 11th highest number of cases among all countries.

    November 15, 2020

    Coronavirus   (Deaths per million)

    US   ( 759) *

    Brazil   ( 778)
    Argentina   ( 781)
    Colombia   ( 666)

    Mexico   ( 759)
    Peru   ( 1,063)
    Chile   ( 773)

    * Descending number of cases

  12. joseph

    Ivan: “The temperature issue is commercial hype from Moderna. We easily have the infrastructure to ship millions of packages on dry ice. You just keep them stored in the shipping box – and use them within 3-5 days of arrival. No big deal – just a little organization and coordination.”

    Just a little organization and coordination? Keep in mind that you are talking Donald Trump and failson Jared Kushner. And they are currently refusing coordination with the Biden administration.

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