The fact that analysts can't agree on the direction our economy is heading is a sure sign that speculation and trend-spotting are essentially debatable tools used to measure our markets. While one area of the country may be prospering, another can be suffering deeply. (Missed last week's update? Read Water Cooler Finance: A Diving Dow And Rotting Eggs.)

IN PICTURES: Obtaining Credit In A Bad Economy

Double-Down on a Double-Dip?
Growth in our economy slowed to a crawl in the second quarter, as was stated in a report released by the U.S. government. According to the country's gross domestic product (GDP), the growth rate settled lower than initially projected, at 1.6%, as opposed to 2.4%. Naturally, this has re-spawned talk of a double-dip recession in the near future. Sung Won Sohn, an economics professor at Cal State University Channel Islands, told CNN.com that the threat of a double-dip has now risen from 25% to 40% since January. Of course, this could also be nothing more than a slow-down in recovery that will pick up again in the fall - a trend that has been observed for quite some time over the years.

Fears of a double-dip recession began growing when the economic recovery began in the third-quarter of 2009, but analysts in some areas - like Orange County, California, claim that a double-dip recession is "unlikely". Good news for plastic surgeons and manufacturers of hair gel.

However, much to the surprise of economic observers, initial jobless claims fell from 504,000 to 473,000 for the week ending on Aug. 21, 2010. Originally, analysts had projected a decrease in initial jobless claims to 485,000. This is being taken as a positive sign by many that a double-dip recession will not occur. (Though a double-dip recession is possible, if all bricks fall into place, it's not likely. Learn more in Dangers Of A Double Dip Recession.)

Fine the Friendly Skies
American Airlines could be hit with the largest fine ever by Federal aviation regulators. The second-largest airline in the world is being criticized on safety violations that may end up costing the company $24.2 million in civil penalties.

In 2008, FAA inspectors noted that two of American Airlines' MD-80 airliners were not properly inspected. Specifically, that the airline failed to properly examine the wire bundles that can be found in the wheel wells of said MD-80 planes. As a result, the FAA grounded hundreds of American Airlines flights. The company stands by its claim that there were no oversights in flight safety, and will challenge the civil penalty.

The previous holder of the crown for "highest fine" was Southwest Airlines. Also occurring in 2008, Southwest voluntarily grounded 44 of its planes on accusations that nearly 60,000 flights had taken off without proper inspections, according to regulations. Initially, the company was fined $10.2 million, but that number was negotiated down to $7.5 million. (These big-name airlines are no more. Find out what happened in Dead Airlines And What Killed Them.)

McDownsize
The U.S. Census Bureau reported recently that the size of the traditional American home is shrinking. This comes after the explosion of the McMansion trend of the 1990s where quickly-built and oversized homes were in high demand. The report claims that the median home size is now 2,135 square feet, down from 2,300 square feet just a few years ago.

But it's not just the size of the house that is being reduced. The higher-end amenities within the home are also decreasing. Luxury items like in-ground pools, media rooms and jetted tubs are also on the decline, as home shoppers are looking for more practical amenities.

Home builders and real estate agents are taking note, and offering smaller model homes at reduced prices. This will obviously affect resale prices in a few years, when those homes are back on the market. (Learn more about the supersized homes in McMansion: A Closer Look At The Big House Trend.)

The Bottom Line
All other indicators aside, optimists are considering the recession "over," as has been suggested on financial websites and papers in many parts of the country. But keep an eye on trends in the housing and employment markets, for they are two areas that are both easy to follow and directly connected to citizens' budgets.

Related Articles
  1. Economics

    Is a Recession Coming?

    In the space of a week, the VIX Index, a measure of market volatility, spiked from 13, suggesting extreme complacency, to over 50, evidencing total panic.
  2. Investing

    What’s Holding Back the U.S. Consumer

    Even as job growth has surged and gasoline prices have plunged, U.S. consumers are proving slow to respond and repair their overextended balance sheets.
  3. Economics

    A Look at Greece’s Messy Fiscal Policy

    Investigate the muddy fiscal policy, tax problems, and inability to institute austerity that created the Greek crises in 2010 and 2015.
  4. Economics

    How Do Asset Bubbles Cause Recessions?

    Understand how asset bubbles often lead to deep, protracted recessions. Read about historical examples of recessions preceded by asset bubbles.
  5. Stock Analysis

    How Rollins Inc. Transformed from Radio to Pest Control

    Discover how Rollins, Inc. grew and expanded, making numerous acquisitions, transitioning from the radio industry to the pest control industry.
  6. Professionals

    Holding Out for Capital Gains Could Be a Mistake

    Holding stocks for the sole purpose of avoiding short-term capital gains taxes may be a mistake, especially if all the signs say get out.
  7. Entrepreneurship

    Mark Cuban Success Story: Net Worth, Education & Top Quotes

    Learn more about America's favorite billionaire: Mark Cuban, outspoken owner of the Dallas Mavericks and star of the hit show "Shark Tank."
  8. Investing News

    What Shook the U.S. Stock Market Today?

    What was looking as a decent year for US Stock market has suddenly gone off track as the Dow Jones Industrial Average plunged 531 points in the week ending August 23, 2015.
  9. Professionals

    Why Investors Should Consider Cash Right Now

    With so many market watchers thinking that the current stock rally is getting long in the tooth, investors might considering upping their cash holdings.
  10. Stock Analysis

    How GM Keeps on Truckin'

    Following a giant bailout and a giant IPO, the new GM is carried by sales of its giant trucks. But is it profitable?
RELATED TERMS
  1. Regional Asset Liquidation Agreement ...

    An agreement between an asset manager and the Federal Deposit ...
  2. The New Deal

    A series of domestic programs designed to help the United States ...
  3. Accelerated Resolution Program ...

    A program designed to reduce the time and cost of resolving failed ...
  4. Asset Liquidation Agreement (ALA)

    A contract between the Federal Deposit Insurance Corporation ...
  5. Capital Loss Coverage Ratio

    The difference between an asset’s book value and the amount received ...
  6. Gross Cash Recovery (GCR)

    The gross cash colloctions expected over the remaining life of ...
RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. What is the correlation between term structure of interest rates and recessions?

    There is no question that interest rates have enormous macroeconomic importance. Many economists and analysts believe the ... Read Full Answer >>
  4. Why should an investor in the retail sector consider the Consumer Confidence Index?

    Investors in the retail sector should consider the Consumer Confidence Index, or CCI, because it measures how consumers feel ... Read Full Answer >>
  5. Which type of retailers tend to perform best during weak periods in the economy?

    Retail is a broad investment sector comprising many different market segments, such as automotive, building supply, grocery ... Read Full Answer >>
  6. What category of retailers will perform most strongly when the economy is doing well?

    When the economy is doing well, the market segments that perform best are volatile segments with products and services that ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!