Fears of another recession could prompt corporate Treasurers and lenders to withhold financing, which in and of itself could raise the probability of less liquidity and further economic weakening.
Sixty percent of corporate restructuring specialists polled by the Turnaround Management Association said a double-dip recession is possible in the next six to 18 months. However, a full 30% said they do not think another recession is likely.
“Availability of financing will be a primary determinant in whether the economy goes back into recession,” said Charles Moore, senior managing director with Conway MacKenzie. “If financing dries up, more companies are likely to take actions to reduce costs and conserve cash, which may push us back into recession.”
“The current tremors in the market are really an indicator that we are in for a prolonged period of muted growth,” added Tom Pabst, president of liquidation firm Hyperams LLC.
As Brad Coulter, a director with O’Keefe & Associates Consulting, sees it, consumers were driving the U.S. economy “for decades” and are currently “tapped out.”
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