Thursday, June 2, 2011

Troubling Signs for the Economy

There are some ominous signs this week that the economic recovery is slowing down. One thing that makes it so troubling is that the signals are coming from very different parts of the economy. For example:

* The manufacturing index calculated by the Institute for Supply Management dropped from 60.4 in April to 53.5 in May. That's the largest one-month drop in the index since 1984, and sent the index to the lowest it's been since September 2009.

* The latest drop in home prices have left them at their 2002 levels, and a full one-third below the 2006 market peak. Home prices have dropped more in this downturn than they did during the Great Depression.

* The Dow Jones index finished the month of May off 1.9 percent, its first monthly drop this year.

* ADP's private-sector jobs report for May was very disappointing, at just 38,000 new jobs added. This report has diverged widely from the official figure in recent months, though; we'll know more on Friday, when the Labor Department releases its figures.

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