The European slowdown has come to the USA, the welfare nation.
At best, we are probably looking at a stalled economy. U.S. manufacturing shrank for the first time in three years and at its fastest pace in a decade. It is the largest decline since 9/11 and the second largest since Carter. Production and exports declined and the number of new orders plunged. This according to Monday’s report by the Institute for Supply Management.
Employers are hiring less, Europe is near recession, and China is suffering major economic setbacks. It’s bad, real bad.
On Thursday, it was announced that the GDP had plunged from 3.0% in the previous quarter to 1.9%. Initial unemployment claims have also crawled back towards the alarming 400,000 mark. Friday’s job numbers are not expected to be good even with the usual government manipulation.
Nasdaq: …The Institute for Supply Management’s index of U.S. manufacturing activity, based on surveys of purchasing managers across the country, dropped to 49.7 in June from 53.5 in May–the first signal of slowing activity since July 2009. Readings below 50 indicate contracting activity. Economists had expected a more-modest drop to 52.
A measure of new orders, which provides indications about future business, fell at its fastest pace in more than a decade–dropping from 60.1 to 47.8. Exports also dropped sharply, and many of the sectors that contracted–including petroleum, plastics and chemical products–were tied to commodities, which have been hard-hit by slowing growth in China, in particular.
The darkening outlook for U.S. factories comes as signs grow that factories around the world are losing momentum. Manufacturing activity in China, the world’s second-largest economy, grew last month at its slowest pace since November, while activity among euro-zone factories is contracting. That activity is slowing in sync around the world raises the risk of a deeper downturn that becomes self-reinforcing.
“The U.S. is catching the slowdown already under way in Europe and China,” said Paul Dales, senior U.S. economist at Capital Economics. “Overseas events appear to be prompting American firms to put orders on hold until the outlook is clearer.”…
Read about more bad signs at the WSJ.