Wednesday, June 01, 2011

Increased Evidence Of A Weaker U.S. Economy

Right now, data are pretty consistently pointing to a significant weakening of what was a very weak "recovery" to begin with. Just today we saw:

-The ADP employment report showing a mere 38,000 new private sector jobs, far short of what is needed to keep up with population growth, much less recovering the lost ground during the slump.

-ISM manufacturing survey index drops sharply, from 60.4 to 53.5, with the key new orders and production sub indexes falling the most.

-While construction spending according to initial estimates rose in April compared to the previous month, the absolute level was lower than before and lower than forecasts because of sharp downward revisions of previous numbers.

-Car sales fell as much as 10.2% in May compared to the previous month in seasonally adjusted terms.

Particularly car sales and manufacturing were probably in part weak because of supply disruptions caused by the Japanese earthquake/tsunami, something that will be reversed soon. However, even after taking that into account, it seems increasingly clear that the underlying strength of the U.S. economy is deteriorating.


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