But some commentators had already gone beyond the danger of a "double dip." They're warning of a return of "systemic risk," which is more ominous. It connotes things slipping out of control.
Here's economist John Makin of the American Enterprise Institute, the conservative Washington think tank, whose latest commentary is headlined "Systemic Risk Returns." "The risks," he writes, "are as bad as or perhaps worse than those that emerged in September 2008 with the Lehman Brothers crisis because policymakers have few tools left to combat a new crisis."
Makin lists some specific worries: the slowdown of the U.S. economy (first-half growth rate of 0.7 percent verged on recession); Europe's continuing debt crisis and the indecisiveness in dealing with it; the rush of frightened investors "into cash and gold"; the interconnectedness of national financial systems (U.S. money market funds, for example, have lent heavily to European banks).
What really spooks Makin is "an absence of obvious policy solutions to the rapid slowdown of the real economies in the United States and Europe" and the adverse implications for banks and other financial institutions. Interest rates are already low; budget deficits are already high. The Federal Reserve's latest effort to boost the economy (so called Quantitative Easing 2) wasn't very successful.
Another gloom-monger is Martin Wolf, chief economic commentator for the Financial Times of London. In his latest weekly column, Wolf doesn't actually use the term "systemic risk," but everything he says points in that direction.
Wolf adopts the phrase the "Second Great Contraction," first suggested by economists Kenneth Rogoff of Harvard and Carmen Reinhart of the Peterson Institute of International Economics. The phrase has a historic pedigree; economists Milton Friedman and Anna Schwartz coined the term "The Great Contraction" in their famous account of the 1930s' Depression. Rogoff and Reinhart resurrected the phrase to indicate that, in its severity and complexity, the present economic slump is nothing like previous post-World War II recessions.
Wolf agrees. He dismisses the notion of a "double dip" recession, because he says the first one never really ended. Wolf reports that by the second quarter of 2011, none of the economies of the six largest high-income countries (the United States, Japan, Germany, the United Kingdom, France and Italy) had attained its pre-crisis level of output.
Like Makin, Wolf fears that faltering economies will weaken financial markets — and that will lead to a broader crisis. Unlike Makin, he thinks government policies might avert the worst but must be "bolder." He promises to spell out what that means in future columns.
All this is unnerving. Indeed, it's scary. Is the alarmism self-serving? After all, prestige in the current crisis has gone to the most pessimistic economists. But that formula may be dated. For what it's worth, most economists aren't so glum. They expect sluggish growth, not another recession or crisis. Or are the warnings the canary in the mine shaft?