Remember when "double-dip" meant something good, like getting twice as much of that hard-shell chocolate dip on your ice cream cone? Now, because of our country's financial problems, and in spite of it being ice cream season, the term is more often associated with a relapse into economic recession. (Investors can find profitable companies - even in a recession. It's all about knowing where to look. See 4 Characteristics Of Recession-Proof Companies.)

TUTORIAL: Behavioral Finance

Though President Obama recently said he's not worried there'll be a double-dip recession, some pretty qualified people disagree with him - like prominent Yale economist Robert Shiller, who warns that the U.S. economy may be at a tipping point. Shiller is especially concerned about the recent uptick in unemployment because any further increase could indicate another recession. "Whether we call it a double-dip or not, I think there is a risk," he said in a June 9 article by Leah Schnurr of Reuters.

To New York University economist Nouriel Roubini, there's more than just a risk. He asserted last summer that a double-dip recession was already underway, citing signs such as ballooning budget deficits, rising unemployment, falling home prices, and greater loan losses in the banking industry. Here are five signs that Roubini was right and we're in a double-dip recession at this very moment.

1. Home Prices Keep Falling
At the end of the first quarter, overall home prices were nearly 3% below the previous bottom they reached in the first quarter of 2009. That means homeowners now have even less equity in their homes than at the height of the housing crisis, right after the three-year period when owners' equity in residential real estate dropped more than 60% from nearly $13.5 trillion to just under $5.3 trillion.

2. Small Businesses Can't Get Credit
Banks are much less apt to extend credit to small businesses than to large ones, which is bad for the economy because small businesses generate 60-70% of all new jobs. Small businesses that do manage to get credit are often charged interests rates in excess of 20%, whereas very large companies are frequently allowed to borrow for as little as a tenth of that cost.

3. Unemployment Has Worsened
Unemployment rose to 9.1% in May from 9% in April and initial jobless claims were higher than expected the week ending June 18, coming in at 429,000 rather than the 415,000 predicted by economists. Rising unemployment hinders the economy by forcing a greater number of people to spend less and the already cash-strapped state governments to spend more on jobless benefits.

4. Consumers Are Losing Faith
The general public has been feeling progressively worse about the economy for some time, if you go by the index of consumer confidence published monthly by the Conference Board. The index fell more than 5% between May and June alone, from 61.7 to 58.5, and it's nearly 50% below its July 2007 peak of about 111.9. Consumers have become more pessimistic about the labor market, too, the Conference Board also reports. (When the economy blows up, these funds offer some protection from major losses. See 8 Fund Types To Use In A Recession.)

5. More People Are on Food Stamps
The number of U.S. citizens on food stamps has been rising steadily for several years and stood at 44.2 million, or 14% of the population, as of February. That's a 67% increase since 2006, the year before the financial crisis, when 26.5 million people were on food stamps. The cost of the food stamp program, which is officially called the Supplemental Nutrition Assistance Program, or SNAP, spiked 29% to about $64 billion in 2010.

The Bottom Line
Numbers like these don't inspire much confidence and certainly do support the notion that we've slipped back into recession. But have we really? Many economy watchers insist the current downturn is merely a bump in the road to recovery and won't last much longer. According to the Federal Reserve, for example, unemployment should be well under 9% by the end of the year and could get below 7% in as few as two years. (Understanding the business cycle and your own investment style can help you cope with an economic decline. Check out Recession: What Does It Mean To Investors?)

Related Articles
  1. Stock Analysis

    4 Key Indicators That Move The Markets

    Educated investors need to keep their finger on the pulse of the economy, and watching certain indicators is a good way to do that.
  2. Investing Basics

    4 Iconic Financial Companies That No Longer Exist

    Learn how poor management, frauds, scandals or mergers wiped out some of the most recognizable brands in the finance industry in the United States.
  3. Savings

    The Worst Financial Problems Ultra-High-Net-Worth-Individuals (UHNWIs) Face

    Understand how the problems of ultra-high-net-worth individuals (UHNWIs) are different from ordinary problems, and identify the unique financial challenges they face.
  4. Investing

    The Enormous Long-Term Cost of Holding Cash

    We take a look into how investors are still being impacted by the memory of the tech bubble and the advent of the last financial crisis.
  5. Active Trading

    What Is A Pyramid Scheme?

    The FTC announced it had opened an official investigation of Herbalife, which has been accused of running a pyramid scheme. But what exactly does that mean?
  6. Options & Futures

    Terrorism's Effects on Wall Street

    Terrorist activity tends to have a negative impact on the markets, but just how much? Find out how to take cover.
  7. Economics

    4 Countries in Recession and Crisis Since 2008

    See which major world economies haven't recovered from the global recession in the early 21st century, including a long-stagnant industrial power in Asia.
  8. Economics

    What to Expect From Mortgage Rates in 2016

    Understand the factors that influence the direction of mortgage rates, and use this information to project what will happen with rates in 2016.
  9. Economics

    Why is Puerto Rico in So Much Debt?

    Learn about the origins and economic factors that led to the downfall of the Puerto Rican economy and what the U.S. government can do to fix the situation.
  10. Economics

    How The Unemployment Rate Affects Everybody

    Depending on how it's measured, the unemployment rate is open to interpretation. Learn how to find the real rate.
  1. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  2. Do interest rates increase during a recession?

    Interest rates rarely increase during a recession. Actually, the opposite tends to happen; as the economy contracts, interest ... Read Full Answer >>
  3. What are the risks of annuities in a recession?

    Annuities come in several forms, the two most common being fixed annuities and variable annuities. During a recession, variable ... Read Full Answer >>
  4. What economic indicators are important to consider when investing in the retail sector?

    The unemployment rate and Consumer Confidence Index (CCI) rank as two of the most important economic indicators to consider ... Read Full Answer >>
  5. How does the risk of investing in the industrial sector compare to the broader market?

    There is increased risk when investing in the industrial sector compared to the broader market due to high debt loads and ... Read Full Answer >>
  6. How can I hedge my portfolio to protect from a decline in the retail sector?

    The retail sector provides growth investors with a great opportunity for better-than-average gains during periods of market ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  2. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  5. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  6. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
Trading Center