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

    Are U.S. Stocks Still the Place To Be in 2016?

    Understand why U.S. stocks are absolutely the place to be in 2016, even though the year has gotten off to an awful start for the market.
  2. Investing News

    U.S. Recession Without a Yield Curve Warning?

    The inverted yield curve has correctly predicted past recessions in the U.S. economy. However, that prediction model may fail in the current scenario.
  3. Economics

    The Delicate Dance of Inflation and GDP

    Investors must understand inflation and gross domestic product, or GDP, well enough to make decisions without becoming buried in data.
  4. Investing

    Retirees: 7 Lessons from 2008 for the Next Crisis

    When the last big market crisis hit, many retirees ran to the sidelines. Next time, there are better ways to manage your portfolio.
  5. Economics

    The 2007-08 Financial Crisis In Review

    Subprime lenders began filing for bankruptcy in 2007 -- more than 25 during February and March, alone.
  6. Economics

    Industries That Thrive On Recession

    Recessions are not equally hard on everyone. In fact, there are some industries that even flourish amid the adversity.
  7. Fundamental Analysis

    Is a U.S. Industrial Recession on the Horizon in 2016?

    Find out why the industrial economy may be teetering on an industrial recession and what could prevent it from going over the cliff.
  8. Fundamental Analysis

    Gloom and Doom for Global Markets in 2016?

    Learn about the volatility in global markets during the beginning of 2016. See why famous investors are saying some economies could see recessions.
  9. Economics

    Lehman Brothers: The Largest Bankruptcy Filing Ever

    Lehman Brothers survived several crises, but the collapse of the U.S. housing market brought the company to its knees.
  10. Economics

    Explaining Economic Indicators

    Investors use economic indicators to gauge investment opportunities and judge the overall health of an economy.
  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 >>
Hot Definitions
  1. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  2. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  3. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  4. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  5. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  6. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
Trading Center