A ‘double dip’ in the U.S. economy is ‘still possible,’ says former Fed official

CNBC reports that the U.S. economy looks set to rebound in the current quarter from the previous three months’ deep contraction — but it could sink again if the coronavirus outbreak is not managed well, warned a former Federal Reserve official.

Dennis Lockhart, president of the Atlanta Fed from 2007 to 2017, was among economists and experts who have raised the possibility of a “double-dip” recession in the U.S. economy. A double dip means an economy returning to a period of decline after a brief recovery.

“I continue to believe that looking forward you have to consider a range of scenarios and among those scenarios would be, obviously, a pessimistic one and that could be a double dip,” Lockhart told CNBC’s “Squawk Box Asia” on Friday.

“If things go badly with the management of the virus and there’s more cascading — which (Thursday’s) numbers of initial claims might suggest — then yes, it’s possible we have a double dip. I don’t think that’s probably the base case, but I think it’s still possible.”

He was referring to the initial jobless claims in the U.S., which came in just over 1 million for the week ending August 22, according to the Labor Department. That was the 22nd time that initial jobless claims had come in above the 1 million-mark in 23 weeks.

Before Lockhart, other prominent policymakers and economists who have warned about the possibility of a double dip include Kansas City Fed President Esther George and former Morgan Stanley Asia Chairman Stephen Roach.