The term „double-dip recession“ describes an economic phenomenon in which an economy first supposedly recovers from a recessionary phase, experiences a slight upswing, and then plunges significantly into another recession. The „double-dip recession“ follows the pattern of the Turkish economy, which even experienced it several times in a row. Experts have now also found signs of the so-called „double dip recession“ in the German economy.
After economic experts newly coined the „double dip recession“ as a term, it spread furiously on a variety of channels. The double dip can be a dire scenario for an economy. But, how does the „double dip recession“ happen in the first place and what does this term derive from? This and much more helpful information on the „double dip recession“ will be provided in the following article.
Definition of the „Double Dip Recession“
The term „double dip recession“ is made up of the English words „double“, „dip“ and the term „Rezession“ (for economic downturn). In combination, the „double dip recession“ can therefore be roughly translated as „double economic downturn“.
This refers to an economic phenomenon that is very different from the typical business cycle of an economy. The regular cycle knows market peaks (the so-called „boom“), the economic downturn (the „recession“), the economic trough (the „depression“) and the economic upswing (the „expansion“). Accordingly, the „recession“ marks a phase in which the economic performance of an economy declines. This is usually followed by a trough and then again by an upswing.
In the „double-dip recession“, however, the first recession is followed by a very short upswing, only to be followed by another recession. In this way, a negative downward spiral is created overall, which seems to weaken the economic performance of an economy in the long term.
Where does the term „double dip recession“ come from?
The term „double-dip recession“ does not have a precise origin. It probably originated in the course of the Turkish „double-dip recession“ that occurred in recent years. In the course of the Turkish double dip recession between 2015 and 2022, there was inflation of the Turkish lira and a noticeable deterioration of living conditions within Turkey. A similar pattern has now been recognised (albeit in a weakened form) in the German economy. The „double dip recession“ is therefore currently experiencing a lot of hype as a term. Accordingly, „double dip recession“ is often used by leading economists in essays or news articles, which of course increases the virality of this expression.
In which areas is the term „double dip recession“ used?
We now encounter the term „double dip recession“ in various areas of everyday and commercial life. However, the following areas are particularly common for the „double dip recession“:
- Finance
- Science
- Social Media
The subsections that follow will delve deeper into the above uses of the term „double dip recession“.
Finance
In the financial sector, we encounter the term „double dip recession“ particularly often. This is a common term used by financial analysts and economists to emphasise economic anomalies. The aim is to describe a specific type of economic recession in which there is a renewed downturn in the economy shortly after it has begun to recover from a previous recession. Among other things, the „double dip recession“ highlights the risks and challenges associated with such a double-dip deterioration in the economy. The mere prospect of a „double dip recession“ can have implications for stock markets, investment strategies and economic policy.
Science
In academia, the „double dip recession“ is a term used to describe patterns and causes of economic causality. Economists and researchers study how various factors, such as business cycles, financial crises and policy decisions, can contribute to a double dip recession. The analysis of such economic phenomena is crucial in order to develop better practices to prevent and manage such scenarios.
Social media
Germany has an increasing number of private investors. Accordingly, the expression „double dip recession“ is now also hyped on social media. Significant channels for this are, for example, Facebook, Instagram as well as YouTube. Financial experts, investors and even laypeople are using the term „double dip recession“ to share their views on the current economic situation and possible risks. Through its use in picture and video captions as well as in the form of hashtags, „double dip recession“ continues to spread as a trending financial term.
Critical view of the „double dip recession“
The term „double dip recession“ has been criticised in many places. In the eyes of critics, it is seen as pure scaremongering. An economic cycle has upswings and downswings that alternate harmoniously. If there is an interim recovery in the course of a recession, this basically means nothing other than that the actual recession was not yet over. The „double dip recession“ is therefore misleading as a concept and in any case only confirms the rule. Moreover, the „double dip recession“ poses a challenge for economic policymakers trying to stabilise the economy – this usually requires more comprehensive measures, such as mitigating the recession. A critical review of this phenomenon emphasises the importance of stable and consistent economic policies, as well as a better understanding of the factors that can lead to repeated recessions in order to counter them more effectively.
Conclusion on „double dip recession“ and similar terminology
In summary, then, the „double dip recession“ can be described as an economic phenomenon that describes a twofold sequence of recessionary economic phases. These are actually atypical for the regular, cyclical course of the economy. The „double dip recession“ is therefore sometimes sharply criticised – the main criticism is the meaningfulness and thus the raison d’être of this expression. Proponents believe that a „double-dip recession“ can be recognised in the current economic situation in the Federal Republic of Germany.
The economic terms „boom“ and „depression“ are related to the term „double dip recession“. A „boom“ describes a cyclical high phase of the economy in which there is great economic growth and a high level of prosperity. A „depression“, on the other hand, describes the exact opposite. This is a low point in the economic cycle where economic slack and low levels of prosperity are prevalent. The „double dip recession“, however, is more akin to the „recession“ (i.e. economic downturn).