US Economy Still at Risk of a Double Dip: Economist

The economy is still at a risk of a double dip, said Peter Dixon, senior economist at Commerzbank Securities. However, he told investors that the U.S. is in no danger of losing its AAA debt rating.

US Downgrade Risk is Laughable
US Downgrade Risk is Laughable   

“The notion that you can actually downgrade the United States, frankly it's laughable because it is the nominal anchor for the world monetary system…and there's absolutely no danger of a default," Dixon told CNBC.

"It’s just not going to happen.”

However, Dixon said the economy is heading into a “very uncertain period.”

“The nature of the downturn we’ve seen this time in which the banking sector has taken such a hit, and households in particular are deleveraging, means this is going to be a very sluggish recovery and you certainly can’t rule out that we will get some sort of double dip,” he explained.

Dixon said the labor market is unlikely to see signs of stabilization until at least the spring of this year.

“And it will be a slow haul thereafter,” he added.

“It will take a long time for the U.S. economy to start creating a lot of jobs again, primarily because the financial sectors will not be there to act as a backup—it will be a slow and grinding recovery for the next 12 months.”

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Disclosures:

No immediate information was available for Dixon or his firm.

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