Odds of ‘double-dip’ recession about 50-50, S.F. Fed report says


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Fallout from the current European debt crisis could help plunge the United States economy back into recession by early next year.

A report released Monday by the Federal Reserve Bank in San Francisco pegged the chance of recession at 1 in 2 during the first half of 2012.


‘The deteriorating fiscal realities in Europe have been keeping many a trader awake at nights, reliving the nightmare of the near-collapse of financial markets in the wake of the Lehman Bros. bankruptcy ‘ of Sept. 15, 2008, the bank’s Economic Letter said.

The economy was already weakened by disruptions in international trade stemming from the Japanese earthquake and tsunami in March, the report said.

However, if the U.S. economy avoids falling into recession in the first half of next year, the risk of it doing so in the second half of the year should begin to ease, the letter said.

Economists formally define a recession as declining gross domestic product -- the value of all goods and services -- for two or more consecutive quarters. The so-called Great Recession officially started in December 2007 and ended in June 2009. Its effects, the most severe since the 1930s, continue to be felt, particularly with high unemployment.


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-- Marc Lifsher