하나은행 하나금융연구소

1. US Economic Slowdown Risks Increase

Mixed trend of economic indicators signal adjustment of US economy and economic
slowdown. Despite a high GDP growth rate, unemployment rate remains 9% and an imbalance exists between financial and real assets, firms and households and public and private sectors
Key leading economic indicators have began to drop from their peak between March
and April, 2010. Leading indicators and ISM index are sharply falling from their peak in
March and April respectively. Retail sales which determine directions of US economy have decreased for consecutive two months since May and consumption mind has sharply cooled down
Amid constant jobless recovery, lack of proper countermeasures is the biggest obstacle of economic recovery. A negative signal in long-term unemployment, working hours and wage will prevent improving a 9% unemployment rate
The US government's awareness of economy is conservative. The federal government revised its economic rate from 3.2~3.7% to 3.0~3.5%. In addition, external conditions such as sovereign risks and China's economic growth rate drop are likely to be worse

2. Fears of Double-dip Recession Grow

Technically, a double-dip recession was caused by oil shock and policy changes in the early 1980s. A w-type recession also occurred during the failure of savings and loans associations in the early 1990s and dot-com bubble burst in the early 2000s
A double-dip recession, which is a very exceptional phenomenon, mainly occurs due to serious external impacts such as oil shock and financial crisis along with improper policy measures. Accordingly, timely policy measures like exit strategies in 2010 and 2011 are required
However, as delinquency risks of small to mid-sized financial institutions resulting from commercial real estate prices drop are escalating, structural problems including inefficiency of policy measures, limited employment recovery and difficulties in ensuring financial strength add to difficulties in selecting policies

3. Various Economic Slowdown Risks Exist

Instability in the financial market caused by the global financial crisis prevents economic recovery. (1)Financial institutions continuously have management difficulties including increased bankruptcy and a slowdown in profitability which recovered in Q4. (2)Vulnerability of the financial system mainly in the short-term financial market resulting from the financial crisis in South Europe has been reaffirmed. (3)The shadow banking system was on the verge of collapse, but has escaped from it. Nonetheless, as it has not yet normalized, unstable factors in the system exist
The lack of automatic economic recovery in the private sector is one of the reasons for
US　economic slowdown. (1) Due to a high level of household debt and firms' passive attitude toward investment and employment, corporate profitability recovery does not lead to household consumption recovery. (2)The financial crisis and reduced global liquidity have prevented employment recovery in the construction, real estate and finance sectors and thus economic recovery has not widely spread. (3)As transactions in the housing slowed down again since May due to inefficiency of relevant policies, possible slowdown again in the real estate market prevents automatic economic recovery in the private sector
External impacts are likely to slow down US economy. (1)The RMB appreciation and China's economic slowdown resulting from tight monetary policies including stabilization in the real estate market have a direct impact on US economy. (2)The financial crisis in Europe is likely to contribute to US economic slowdown resulting from increased risks in the capital market
Combination of policies against various economic slowdown risks is expected. Effects of financial policies have began to decrease since Q2, 2010 and thus the US government is likely to take additional countermeasures. With weak economic recovery and low inflation, cautious exit strategies are expected, which will reduce a risk of double-dip recession

4. Proper Policy Measures Decrease a Possibility of Double-dip Recession

Economic slowdown risks are recently spreading in the US. Since structural problems such as financial instability, a slowdown in the housing market and unemployment have not been resolved, economic adjustment will be inevitably required
Fears of double-dip recession are escalating. However, since (1)economic slowdown
resulting from external impacts, (2)economic stimulus measures, (3)side effects like a sudden price increase and (4)a policy shift from loose to tight happens together, a
double-dip recession is not likely to easily occur
Policy measures will play a significant role in avoiding a double-dip recession. As the US government has proven its ability to aware risks and implement policies since the financial crisis, it is capable enough to avoid a double-dip recession
Although a double-dip recession is less likely to occur in the US due to its financial stability and proper policy measures, economic adjustment is likely to happen in the short term since US is exposed to various economic risk factors and growth potential is expected to slow down