Spotting a double-dip recession

Yeah, I like to surf! As soon as I arrived in California in 2000, I decided I had to learn, and I've been surfing ever since. When you paddle out in L.A., you're only a few hundred yards from the metropolis, but that stretch of whitewater makes all the difference. Sitting on your board, watching the horizon, you may as well be a hundred miles away.

I keep this to myself most of the time, but I like to compare the economy to a surf session. When things go well, when you're fit and strong, and your equipment's in good shape, and the weather's good, it's easy to catch a wave. It may be big and fast, but you charge down it, skip around a bit, and then punch out and paddle back to the lineup. Perfect.

But it you're out of condition, or maybe if the weather's a bit dodgy, you're likely to take a spill, and then you have several tons of water hammering down on top of you. You lose grip of your board, you get spun around, again and again, water goes up your nose, in your ears, you have no idea which way is up, and it's a struggle to stay calm.

It's a bit like an economic downturn - when the economy's in a slump, nothing feels good. People are losing jobs, stores are closing, homes are going into foreclosure. There's a sense of bewilderment, a lack of direction, and an underlying sense of fear. And here's the thing about a downturn, when you're in it, you have no idea how bad it really is. Could be a bad downturn, could be a recession ... could be a depression. You don't know until you can get some perspective - in the surfer's case, you don't know how bad it is until you come up for air. If you're lucky, the surface will be pretty calm and you'll be able to paddle out. If you're unlucky, there'll be another wave bearing down, and you're in for another spin cycle.

The days I've taken a real hammering (usually in the wintertime, down at El Porto, in case you're interested) I end up on the beach. And that's where I think we are right now in this economy. The bean counters who crunch the data are telling us we took a real beating in that recession, even more of a beating than we thought. We got washed back to the beach and now we're standing in the water, our board tucked under our arm, wondering whether it's time to paddle back out.

It's hard to make a decision right now. Paddling back out will mean consumers spending again, and companies expanding. But the conditions look pretty mixed. On the one hand we have companies loaded up with cash. Some housing markets are recovering. But at the same time, the jobless situation is still awful, and most companies aren't hiring yet.

So what do we do? Do we paddle out? We could get lucky, and make it out to the lineup without any problems. On the other hand, we could run smack into another thumping set of big dangerous waves - that would put us in danger of a double dip, and we might not make it back to the beach unscathed next time.

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