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Heading for a 'Double Dip'?

Fears of a new recession growing as economic problems persist

Fears that the United States is heading into another recession are on the rise.

The latest economic numbers suggest a recovery that is more fragile than analysts predicted earlier this year, with no end in sight to high unemployment, flat consumer spending, stock market swings and a rotten housing market. Further threatening prosperity is the unresolved financial crisis in Europe.

See also: What to do when the stock market slumps.

Continuing layoffs have pushed unemployment above 9 percent. Employers surveyed in July by the global outplacement consultancy Challenger, Gray & Christmas Inc. said they planned to shed 66,414 workers, the highest level of layoffs in 16 months.

If economic trends continue in this direction and stocks continue to plunge in value, a growing number of analysts say, a new recession could grip the nation within the next 12 to 18 months.

"I'm not so sure we're out of the last recession," says Ty J. Young, a wealth adviser who heads an Atlanta firm that bears his name. "The reality is, people on the street don't feel like we're in a recovery. They're saving more money and spending less, and that means they think we're in a recession as well."

Housing market remains a problem

Young cites the nation's high unemployment, declining wages and rising cost of energy and food. Plus, he says, "We haven't found a bottom in the real estate market yet — lenders are holding on to three to five years of foreclosure inventory — and it's been the housing market that has led us out of a recession every time in the last 50 years."

On Tuesday, the Federal Reserve announced its intention to keep interest rates at historic lows through 2013 to boost the recovery. But analyst Paul Dales of Capital Economics called that pledge a "symbolic gesture designed to reassure the financial markets rather than boost the real economy."

Investors appear to be anything but reassured as the stock market suffered wild gyrations and jaw-dropping losses over the last week. The Dow Jones industrial average plunged 513 points to a nearly three-year low on Thursday, fell 635 points on Monday, recovered to close up 430 points on Tuesday, and dropped almost 520 Wednesday.

Many economists believe there's now a one-in-three chance of another recession, up from a one-in-four risk just a month ago. What didn't help was the debt ceiling deal, which put off key budgetary decisions until after the 2012 elections.

Next: Business lacks confidence. >>

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