The artificial nature of the U.S. economic recovery from the recession lows has always been obvious. In recent months, judging from media coverage, it is now mainstream. While there are a few lingering signs that support some modest optimism, it is getting difficult to find much to cheer about. In our letter Vol. 2.10, The Artificial Economic Recovery, dated July 23, 2010 we pointed out that the U.S. growth trajectory was converging on 1% p.a. With revisions to second quarter GDP that seems to be fact now. A double-dip U.S. recession is still not a done deal but forces are all on the side of economic weakness and deflation, and a double-dip recession next year carries a significant possibility.
