U.S. Federal Reserve Chairman Ben Bernanke

(Photo Credit: AP)

By Neil Irwin
The economic outlook has become steadily gloomier over the last couple of months. A major deceleration of growth is already under way, and the risk of a dip back into recession is much higher than it was at the beginning of the summer. Financial markets have fallen steadily, reflecting that risk, as has President Obama’s approval rating.

On one hand, these weak economic results are to be expected. As economists Carmen and Vincent Reinhart documented in a new paper, recessions triggered by severe financial crises are normally followed by extended periods of weak growth and high unemployment like the one we are now seeing.

On the other hand, however, a certain fatalism — that a double-dip recession is inevitable–has crept into a lot of economic analysis lately, and it may be overstating the degree to which we are in dire straits. In fact, there are some reasons for at least modest optimism. A roaring recovery is probably not on the way, but here are five reasons that a slow-and-steady recovery is likely to continue.

Read full article here: http://voices.washingtonpost.com/political-economy/2010/09/five_reasons_to_be_optimistic.html?hpid=topnews