It’s one thing when Nouriel Roubini says there’s a high chance of a double-dip recession, since such bearishness is to be expected from him. Yet now Goldman says there’s a 25% chance of a double-dip recession:
Goldman’s Jan Hatzius, via Alphaville:
…we strongly disagree with the notion that the recent slowdown in activity is a temporary “soft patch” in an otherwise fairly decent recovery, which seems to underlie the Fed’s forecast of a reacceleration in 2011 after a modestly slower period in 2010H2. On the contrary, we believe that the stronger growth of late 2009/early 2010 was a temporary “firm patch” in an otherwise extremely anemic recovery, and there is a sizable (25%-30%) risk of a renewed recession.
This means we should expect another $1 trillion of quantitative easing from the Federal Reserve, as a pre-emptive action to prevent a double-dip from happening according to Goldman.