Over six weeks, the Dow Jones industrial average has gained 9.7 percent, but that streak looks ready to close down.
Chalk it up to an honest correction. The latest economic data was unexciting to say the least: U.S. manufacturing gained some momentum, going from nearly a standstill -- neither growing nor shrinking -- to something fractionally more encouraging.
A research firm said -- straight-faced, apparently -- that the median income in the United States has dropped substantially faster during the economic recovery than it did during the Great Recession.
Although the recovery period has been longer -- 38 months compared to 18 months of recession -- since June 2009, the median U.S. household income has come down 4.8 percent. During the so-called hard times, from December 2007 to June 2009, the median household income dropped 2.6 percent.
This would be a very unnerving set of figures for presidential candidates to wave around. Why are U.S. families falling farther behind now than they were during a debilitating recession?
The phenomenon is not so difficult to explain, but it would be hard enough to explain in a 30-second television slot that Republican presidential candidate Mitt Romney could make hay of it, anyway.
Simply put, the economy is too big to stop on a dime and various repercussions don't kick in immediately during a recession. There is lag time going into a recession and lag time coming out of one. Now explain lag time to the masses in 30 seconds or less.
Secondly, "Based on our data, almost every group is worse off now than it was three years ago with the exception of households with householders 65 years old and older," said Gordon Green of Sentier Research, which published the study.
That means, yes, there's lag time, but on top of that this recovery stinks.
The bottom line, inescapable figure -- the unemployment rate -- went in Barack Obama's direction -- that is to say, it improved -- from the fall of 2011 to mid-spring this year largely due to workers giving up rather than finding gainful employment. That can't be good.
The two most critical economic stories of the week involved an attempt by Greek President Antonis Samaras for a two-year extension on terms for the country's multibillion-dollar international bailout.
It's a sensible request. The Greek economy has not improved and sweating out each tranche of the bailout funding as if it were life or death is counterproductive. But French President Francois Hollande and German Chancellor Angela Merkel got together this week ahead of talks with Samaras and came away with the message that nothing will be decided until the next report by the troika -- the International Monetary Fund, the European Central Bank and the European Commission -- which is due in September.
On U.S. soil, the big shake-up was another pledge by the U.S. Federal Reserve to act unless the recovery improves -- yes, the recovery that can now be described as more destructive than the actual recession.
As predicted here, gold prices shot up and the dollar lost ground after the Fed's meeting minutes made it explicitly clear that further stimulus action would be taken. Good news if it pans out. But nobody knows if the Fed will make good on its pledge or not.
In international markets Friday, the Nikkei 225 index in Japan lost 1.17 percent and the Shanghai composite index in China dropped 0.99 percent. The Hang Seng index in Hong Kong dropped 1.25 percent and the Sensex in India fell 0.38 percent.
The S&P/ASX 200 in Australia shed 0.79 percent.
In midday trading in Europe, the FTSE 100 index in Britain slipped 0.34 percent while the DAX 30 in Germany gave up 0.48 percent. The CAC 40 in France dropped 0.47 percent and the Stoxx Europe 600 slipped 0.25 percent.
|Additional Analysis: Economic Outlook Stories|
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