The Recovery: Still Sluggish

The index of leading economic indicators for May was rolled out this week, and the numbers are in positive territory, although just barely. After not rising at all in April, the index rose by 0.4 percent in May. Of the ten indicators, five were up in May, and five were down, with the stock market decline being the biggest culprit on the downside.

All told, the Conference Board thinks that adds up to a recovery that will continue but at a very slow pace. One forecast out of UCLA calls for 3.4 percent GDP growth throughout 2010, followed by 2.4 percent in 2011 and 2.8 percent in 2012. That would be OK for ordinary times, but it's not going to be enough to move the unemployment numbers a whole lot. One common estimate is that it takes 5.0 percent GDP growth for any kind of real jobs growth. According to the UCLA figures, their growth forecast leaves unemployment at 8.6 percent by 2012.

So the vicious cycle continues: We won't see a big movement in the unemployment figures until we get robust GDP growth. We won't see robust GDP growth until we get big movement in the unemployment figures. So it looks like the recovery will just keep plodding along.