This morning the government issued new growth rates for the economy that clearly showed the economy was beginning to slow down again. In fact even the President’s mouthpiece the New York Times is predicting that this slowdown trend will continue. The Times is asking the question if the “recovery” so far has been a jobless one, what happens when when the economy declines again?
The nation’s economy has been growing for a year, with few new jobs to show for it. Now, with the government reporting a growth rate of just 2.4 percent in the second quarter and federal stimulus measures fading, the jobs outlook appears even more discouraging.
“Given how weak the labor market is, how long we’ve been without real growth, the rest of this year is probably still going to feel like a recession,” said Prajakta Bhide, a research analyst for the United States economy at Roubini Global Economics. “It’s still positive growth — rather than contraction — but it’s going to be very, very protracted.”
….Many economists are forecasting a further slowdown in the second half of the year, perhaps to an annual rate as low as 1.5 percent. That is largely because businesses have refilled the stockroom shelves that were whittled down during the financial crisis, and there will not be much need for additional orders.
Or worse….after all these economists are not counting on the additional taxes from Obamacare or the end of the Bush tax cuts that will further slow the economy down.
Additionally, the fiscal stimulus measures that have propped up growth are expiring. Proposals for individual programs like another expansion of unemployment benefits have been beaten back each time they have come up in Congress.
Not exactly true, it is the fact that the Democrats in Congress did not want to pay for the additional benefits that have lead the benefits to be “beaten back.”
Other indicators are also predicting an economic slowdown:
Consumer confidence dropped big time in July
Confidence tumbled in July due to height- ened concerns about personal financial prospects as well as the overall economic outlook. Income and job prospects were extraordinarily weak and those bleak prospects have made consumers more cautious spenders. Rather than the economy gaining strength, consumers now anticipate a slowing pace of growth, and rather than economic policies acting to improve prospects, the policies of the Obama ad- ministration have increased economic uncertainty among consumers. Overall, the data suggest that the current slowdown in spending is likely to persist well into 2011 as it reflects a widespread and general realignment of job and wage expectations. While a double dip is still unlikely, it now has a non-ignorable 25% probability.
Even the trucking industry is showing a slowdown which reflects fewer goods and services being shipped for sale:
The quote of the week comes from Bob Costello, Chief Economist of the American Trucking Association who is warning of an economic slowdown:
ATA Chief Economist Bob Costello said that the two sequential decreases reflect an economy that is slowing. Furthermore, growth in truck tonnage is likely to moderate in the months ahead as the economy decelerates and year-over-year comparisons become more difficult. Nevertheless, Costello believes that tonnage doesn’t have to grow very quickly at this point since industry capacity has declined so much. “Due to supply tightness in the market, any tonnage growth feels significantly better for fleets than one might expect.”
That warning came on the back of yesterday’s data release showing the second consecutive month of declines in truck tonnage:
The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index decreased 1.4 percent in June, although May’s reduction was revised from 0.6 percent to just 0.1 percent. May and June marked the first back-to-back contractions since March and April 2009. The latest reduction lowered the SA index from 110.1 (2000=100) in May to 108.5 in June.
And finally The Economic Cycle Research Institute’s leading indicator has fallen even further.
Zero Hedge: The ECRI Leading Indicator has just moved further into certain recession territory, hitting -10.7 for the most recent week (the previous revised number is -10.5).
The Message is, “Fasten your seat-belts, the economy is going to really suck.”