Does Tim Pawlenty Expect A Double Dip Recession?

  • Share
  • Read Later

Here is Tim Pawlenty’s “response” to President Obama’s campaign announcement.


It’s a crafty play on President Obama’s slogan, “Win the Future.” Asks Pawlenty, with super macho voice manipulation, “I’ve got a question for you. How can America win the future when we are losing the present?” As he says these words, we get a strobe flash of doomsday images: Houses for sale, a foreclosure sign, a shot of the debt clock, and an screenshot from CNBC-TV18 that reads, “Double Dip Threat Real.”

This screen shot comes from a December 2, 2010 interview with Dominique Strauss-Kahn, the managing director of the International Monetary Fund. In the interview, Strauss-Kahn does not blame the U.S., but Europe for the double-dip threat potential.

Q: You mentioned that the possibility of a double dip recession is not probably there but it is a risk, can you expand on that?

A: Yes, our main focus, our baseline does not include a double dip and we believe that at the global level the recovery will go on. It is very strong in Asia not only in India for example, but other countries too. It is strong in Latin America, it is strong almost everywhere in the world. Even in the US, the situation is more uncertain. The only part of the world where the recovery is sluggish is Europe and that is why we are focusing on that.

But globally we expect the recovery to go on. Nevertheless there is a lot of downside risk and if one or two of them happen at the same time, the bubbles that the surge in capital inflows may create, the fact that the financial sector is not totally repaired or anything like this, if everything happens together then you may have a conjunction in which finally the recession comes back and what you called a double dip, it is not our forecast, it may happen.

I doubt Strauss-Kahn would agree with Pawlenty’s implication that double-dip fears in the U.S. would ease, and the issue of Europe and capital inflow bubbles would go away, if the former Minnesota Governor became president of the United States.

A few weeks after this interview, the Wall Street Journal surveyed economists about the risk of a double dip recession in the U.S.

For the year, they expect GDP will rise 3%. Meanwhile, they have reduced the odds of a double-dip recession to 15%, the lowest average forecast of the year, from 22% in September survey.

That suggests there is improvement, and that even when the screen shot was taken four months ago, America was not exactly losing the present, though the progress remained perilously weak.