Heading for a 'Double Dip'?

Business lacks confidence

"Businesses don't have the confidence to hire and spend to grow their business when they don't know what the regulatory environment will look like, what the tax environment will be, what their obligation for providing employee health benefits will be," says Mark Cortazzo, senior partner at Macro Consulting Group in Parsippany, N.J.

"What you're seeing is that small business, the backbone of the nation, is putting more burden on the existing workforce rather than going out and hiring … because the financial uncertainty is too great.

"We need another stimulus," he adds. "Without it, we will continue to fade into recession."

Painful times ahead

Whether the economy moves in that direction or continues to stumble along, conditions will remain painful. Charles Sizemore, chief investment officer at Sizemore Capital Management in Dallas, says analysts make too much of the "R word."

"Do you really care if the economy is just flat or in a recession?" he says. "The result is the same to your daily life, to employment. It's not as if a company's decision to hire or lay off people will hinge on precise GDP numbers." GDP, which stands for gross domestic product, is a measure of the economy as a whole.

Sizemore says that the Great Recession was so severe that it changed Americans' mindsets about spending. Families began paying down debt and squirreling away savings as they worried about job security — assuming they still had a job.

Spending curbs boost household wealth but undermine growth in an economy dependent on consumer spending. "You have the baby boomers, the richest and biggest generation in history, going into savings mode, paying down debt and getting ready for retirement. That's going to be a brake on the economy," Sizemore says.

"I see a prolonged period where the economy has a good year, then fizzles, has maybe two good years, then fizzles. I do not think we're looking at year after year of economic decline. I think we'll see fits and starts for a decade."

Also of interest: Study shows older adults lose big in recession. >>

Carole Fleck is a senior editor at the AARP Bulletin.