Risk Of Double-Dip Recession Is Rising, Says Krugman

Several recent reports suggest that the recovery is faltering. See today's ISM index, for example, as well as the global PMI, continuing jobless claims, and the house-price recovery.

Paul Krugman cites other disappointing news (as well as the ISM) and says that the risk of a double-dip is increasing:

I’ve never been fully committed to the notion that we’re going to have a “double dip” — that the economy will slide back into recession. But it has been clear for a while that it’s a serious possibility, for two reasons.

First, a large part of the growth we’ve had has been driven by the stimulus — but the stimulus has already had its maximum impact on the growth of GDP, will hit its maximum impact on the level of GDP in the middle of next year, and then will begin to fade out. Second, the rise in manufacturing production is to a large extent an inventory bounce — and this, too, will fade out in the quarters ahead.

Two stories this morning highlight the risks.