Alan Reynolds On A "Double-Dip" Recession

Alan Reynolds wrote an informative piece in yesterday's Wall Street Journal concerning a possible "double dip" recession.

Essentially, Reynolds argued that two political extremes are both arguing for a developing double-dip recession. On the left, Robert Reich is using it to advance the case for yet another stimulus spending bill from Congress. On the right, conservatives are hopeful of a double-dip recession to support further castigation of the administration and a wasteful Congress, whose stimulus spending has been ineffectual.

Reynolds spends considerable effort refuting both, getting into the details of government unemployment statistics in the process. He contends that we have a slow, but not reversing economic expansion. He argues that even the 2001 expansion displayed very lagged employment.

I respect Reynolds and generally find his work to be convincing and sensible. Thus, I'm inclined to take this piece on its face. Reynolds doesn't deny that businesses are experiencing a profitable recovery. He does, however, persuasively argue that the lag in re-employment does not mean there's not still a recovery. And it doesn't mean there will be a return to recession.

I do wonder, however, with Art Laffer's recent Journal piece fresh in my mind, what economic indicators it would take to cause Reynolds to reconsider the possibility that we are headed back into recession.