Recent Economic Numbers Paint a Troubling Picture

May’s jobs report was an undeniable disaster with only 69k jobs created in the last month. To make matters even worse, April’s number was revised down from the 115k to 77k. Unemployment (U3) ticked up to 8.2 percent and U6 went from 14.3 to 14.8 percent. It does not appear that a summer of recovery is on its way. In fact, the risk of another recession is quite high.

An in-depth review of May’s employment numbers by James Pethokoukis reveals that the actual unemployment rates would be much higher if large numbers of people had not dropped out of the workforce altogether.

In the 25-54 age cohort, which is considered the core group in the workforce, the participation rate is nearing historic lows. This age bracket is important to examine because it is the group considered to be in the prime of their working years. Investor’s Business Daily took a look at the numbers:

From mid-1987 until the Great Recession, the employment-to-population ratio of 25-54-year-olds usually ranged from78.5%to 80%. It never fell below78.2%even during the 1990-1991 and 2001 slumps. But now, nearly three years after the recession ended in June 2009, thatratio stands at just 75.7%.

More troubling, even than May’s jobs report, is the other economic indicators in recent months that point to a significant slowdown in the economy both here in the U.S. and abroad.

The first of these economic indicators that must be examined is the Institute for Supply Management or ISM. The ISM is an index that measures factory output in the U.S. According to Howard Packowitz, in a Wall Street Journal article:

The Institute for Supply Management-Chicago reported Thursday that its business barometer fell 3.5 points to 52.7 in May, the third straight monthly drop and lowest reading since September 2009.

Readings above 50.0 reflect economic expansion. However, three consecutive declines are “associated with the onset of each of the last seven national recessions, with a lead of some six-to-eight months,” ISM-Chicago said in a news release.

Consumer confidence hit a four month low in May. According to Bloomberg, “The Conference Board’s index decreased to 64.9 this month from a revised 68.7 in April, figures from the New York-based private research group showed today.”

Add in the biggest drop in home prices since the housing crisis began in 2006 and it is no surprise that consumers are holding the purse strings tight.

Lastly, the GDP numbers reveal the disturbing possibility of another recession. Pethokoukis states:

Last year, the U.S. grew at just a1.7%pace. Research from the Federal Reserve finds that that since 1947 when year-over-year realGDPgrowth falls below 2 percent, recession follows within a year 70 percent of the time. We are firmly within the Recession Red Zone.

Not only is it unlikely for there to be a summer of recovery, the odds of a double-dip recession are very high indeed. This is terrible news for American workers and families who have already been suffering for several years as a result of President Obama’s disastrous economic policies. Clearly, it is time for a leadership change in November.