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09.09.2010 / Market Analysis Recap. Posting by Stephen Frantz, President, Tributary Capital Management.

There has been much debate over the last several months over the probability of a double dip recession. History is not on the side of those forecasting such an event. There is some debate as to the frequency and definition of a double dip, but depending on what camp you are in there have been either two or three double dips in the last 100 years.

"Stocks look attractively valued based on consensus forecasts, selling at about 13 times next year earnings."

In 1930, a combination of tightening fiscal and monetary policy in the face of 25% unemployment in the midst of the great depression led to the first double dip. Coming out of a recession, GDP rose 3.6% in the 3rd quarter of 1970 before a UAW strike against GM threw the country back into recession. In 1981, the then chairman of the Federal Reserve, Paul Volcker, slammed the brakes on economic expansion by forcing interest rates higher to drive rampant inflation out of the economy.

There is no question economic expansion is slowing. We are always concerned about the possibility of things such as a double dip recession. Fortunately, in the absence of a systemic shock that we do not currently see, the more likely outcome is an extended period of slow growth, perhaps in the 1.5 - 2% range for GDP.

For more information on Tributary Capital Management, visit tributarycapital.com or email info@tributarycapital.com.


What are your thoughts on a possible “double dip” recession? Please share your comments.


Comments are provided as general market commentary and should not be considered investment advice or predictive of any future market performance.  Past performance does not guarantee future results.

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