Chance of Double Dip Recession: Over 50%

NEW YORK (MainStreet) -- So much for a happy New Year.

The odds of the country entering another recession sometime in early 2012 are "greater than 50%," as economic instability in Europe could undermine the fragile economic recovery in the U.S., according to a report released Monday by the Federal Reserve Bank of San Francisco.

The risk of a recession due to domestic factors alone is fairly limited at less than 30%, but the report finds that international concerns - particularly the European debt crisis -- elevate the likelihood of another recession to more than 50% through the first quarter of next year.

"Prudence suggests that the fragile state of the U.S. economy would not easily withstand turbulence coming across the Atlantic," the researchers note in their report. "A European sovereign debt default may well sink the United States back into recession."

The Fed's estimate from last year had put the odds of another recession in the first half of 2012 at exactly 50-50, but those estimates increased slightly in part because of the debt crisis in Europe as well as lingering instability caused by the Japanese earthquake in March.

The silver lining, though, is that if the country withstands the threat of a recession in the beginning of 2012, we may be in the clear afterward.

"If we navigate the storm through the second half of 2012, it appears that danger will recede rapidly in 2013," the report concludes.

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