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US economy slowing down again ?

This was a terrible month for the Economy. There was lot of troubling data that flowed all week. As expected only 54,000 Jobs added and the unemployment rate went up to 9.1 % just in line with other economic data. This in turn took the stock market down. Right now the market is trading below its 50 day moving average. This is not good. This is a grinding recovery and slow and painful times are ahead. About 150 economists sent a letter to the President saying any increase in government debt must be met with spending cuts.  A battle started brewing in Washington on debt ceilings which are being raised to borrow more to spend more.

This is no surprise at all and the whole week was filled with troubling data on the economy.

* ADP payrolls only added 38,000 private sector jobs
* Housing prices plunged 4.2% in the first quarter
* Mortgage Bankers Association mortgage applications dived 4%
* ISM factory index tumbling from 60.4 in April to 53.5 in May
* Pending home sales declined further than last month
* Feds added $2 Trillion to its balance sheets to buy new debt

“The recovery is extraordinarily disappointing. It’s not even a half-speed recovery,” said Chris Probyn, chief economist with State Street Global Advisor’s in Boston. “It will take until probably 2014 at least to get back to the levels of employment even close to what we had in 2007.”

The May job numbers show that the economy has taken a turn for the worse. Whatever was a  recovery is no more a recovery as the stock indexes and major market direction changed as seen on the chart of S&P500 . Now the SPX is trading below its 50 day moving average killing the robust bull market.

The job report adding 54K to payroll was in line with other numbers which were slowing down  the Economy and the GDP which was 1.8% last quarter. Its the high energy prices combined with WARS and undermining of consumer and business confidence. Employers wont hire during these WARS and uncertain times. Now the stock market is diving taking down all the Wealth with it.

Democrats will keep on rallying behind someone who can’t even help them. With $4.00 gas prices, 9.1% unemployment rate , a depression era Real estate market and fighting 3 wars that are bleeding the Treasury upside down in 4 different countries to boot,  and they still keep  blaming George Bush ? Without assigning any accountability to the man in charge after 2.5 years.

“Everyone keeps expecting the economy to all of a sudden accelerate. People jumped on that bandwagon at the end of last year,” Probyn said. “But that’s not going to happen.”

The only way for the economy to show sustainable improvement is for companies to start hiring again more aggressively, getting the housing market to bottom out here and Washington  to find viable solutions for our debt crisis. With these efforts may be we can mount a sustainable recovery in 2011.

{ 1 comment… read it below or add one }

Josie Ogrodowicz June 25, 2011 at 2:57 am

Hello.This post was extremely remarkable, especially since I was browsing for thoughts on this issue last Wednesday.

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