A Second Recession Would Be Worse

The NYT points out that a second recession would probably be more painful than the first (via Ritholtz):

If the economy falls back into recession, as many economists are now warning, the bloodletting could be a lot more painful than the last time around.
Given the tumult of the Great Recession, this may be hard to believe. But the economy is much weaker than it was at the outset of the last recession in December 2007, with most major measures of economic health — including jobs, incomes, output and industrial production — worse today than they were back then. And growth has been so weak that almost no ground has been recouped, even though a recovery technically started in June 2009.
“It would be disastrous if we entered into a recession at this stage, given that we haven’t yet made up for the last recession,” said Conrad DeQuadros, senior economist at RDQ Economics.
When the last downturn hit, the credit bubble left Americans with lots of fat to cut, but a new one would force families to cut from the bone. Making things worse, policy makers used most of the economic tools at their disposal to combat the last recession, and have few options available.

Later, the article points out that companies are sitting on a pile of cash, so maybe they won't slice payrolls as much as the last recession.  I still maintain that companies are sitting on that money to be able to pay off debt as it comes due, in case the credit markets seize up again like they did in the fall of 2008 and early 2009.  I don't think they'll use that to make payroll until they know the credit markets are safe.  Even then, if demand is down, workers will be laid off.  It is a buyer's market in employment, so they don't have to fear too much on the labor side.