2011 ‘Recovery Summer’ looking like a disappointing rerun of 2010

June 16, 2011

Those “bumps in the road” are starting to come fast and furious. The mix of disappointing U.S. economic reports and fear of a Greek default must be weighing heavily right now on the minds of the Obama 2012 re-election team. We are now looking at another quarter of around 2% GDP growth, which will do little to lower unemployment.  A few selections from my email in-box:

—  Michael Dard, MKM Partners: “With Greece appearing to be on a fast track to default, and Ireland and Portugal likely not far behind, the stench of a “credit event” is once again in the air.”

— Nicholas Tenev, Barclays Capital: The Philadelphia Fed manufacturing index sank to -7.7 in June from 3.9 in May, well below our (8.0) and consensus (7.0) forecasts and the first negative reading since September.  … While respondents continue to report small increases in shipments and employment, the overall weakness of this report corroborates the Empire State manufacturing survey’s discouraging tone, signaling that the manufacturing slowdown worsened in June.:

— RDQ Economics: “The Philadelphia Fed’s general business conditions index was much weaker than forecasts …  It is now three months since the Japanese quake and tsunami and it is hard to attribute a further weakening in manufacturing in June to this event. However, this then begs the question as to why manufacturing appears to be slowing further (and possibly contracting in June). For now, we are letting the data speak for themselves and it looks like the manufacturing sector continued to lose steam in June.”

— Daniel Silver, JPMorgan: “The most recent jobless claims report showed a bit of improvement in the data, but the data still signal weakness in the labor market relative to what was reported throughout most of February, March, and April. Initial claims for the week ending June 11 declined 16,000 to 414,000 from an upward revised figure for the prior week. This decline was a small step in the right direction for the labor market, but claims have now remained above 400,000 for ten straight weeks. “


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Obama may be toast, but the GOP is working awfully hard to lose the 2012 election. He just may pull off a second term. This is not good, not good at all.

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