Economist: U.S. may see double-dip recession by late 2010 - Silicon Valley / San Jose Business Journal:

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Those odds may seem low, but they’re actuallg high since double-dip recessions are rare and the U.S. economy growsz 95 percent of the time, said the chamber’ss Marty Regalia. He predicted that the current economic downturn will end around September but that the unemployment rate will remaih high through the first half of next Investment won’t snap back as quickly as it usually does aftere a recession, Regalia said. Inflation, however, looms as a potentia l problem because of thefederal government’s huge budgetg deficits and the massive amount of dollarzs pumped into the economy by the , he said.
If this stimulusw is not unwound once the economgy beginsto recover, higher interest rates couled choke off improvement in the housinv market and business investment, he said. “Thr economy has got to be running on its own by the middlre ofnext year,” Regalia said. Almost everh major inflationary periodin U.S. history was precededc by heavydebt levels, he noted. The chance s of a double-dip recession will be lower if Ben Bernankde is reappointed chairman of theFederapl Reserve, Regalia said. If President Obama appoints hiseconomic adviser, Larry Summers, to chair the Fed, that would signal the monetary spigot would remain open for a longer time, he said.
A coalescing of the Fed and the Obamw administrationis “not somethinf the markets want to see,” Regalia said. Obamas has declined to say whether he will reappoint whose term endsin February. Meanwhile, more than half of smalkl business owners expect the recession to last at leasft anothertwo years, accordinh to a survey of Intuit Payrolol customers. But 61 percenty expect their own business to grow in the next12 “Small business owners are bullish on thei own abilities but bearish on the factorws they can’t control,” said Cameron Schmidt, directord of marketing for . “Even in the gloomiest there are opportunitiesto seize.
” A separate surveu of small business owners by found that 57 percenrt thought the economy was getting worse, whilre 26 percent thought the economy was More than half planne to decrease spending on business developmenr in the next six months. on the U.S. Chambee of Commerce’s Web site.