Just two words can speak volumes: "unusually uncertain". That‟s how Federal Reserve Chairman Ben Bernanke described our outlook for growth when testifying before Congress last week.
Uncertain is right. Last week the Conference Board reported that the Leading Economic Index (LEI) fell .2% in June. And according to the report, "The indicators point to slower growth through the fall". So here‟s the thing: the Lagging Economic Index rose .1%, the Coincident Economic Index was unchanged, and, again, the Leading Economic Index fell .2%. Add it all up, and our current situation is mediocre, and the future looks worse.
Then, continuing its trend, the Economic Cycle Research Institute‟s Weekly Leading Index fell -10.5.
And last week, a new study was released that gives shape to the negative outlook. The Economic Insecurity Index suggests that 20% of people have suffered a serious economic loss in the last year…up from 12.2% in 1985. That means that in 1985, one in eight Americans were insecure about their financial situation, and today it‟s one in five. And that insecurity is measured by a 25% decline in income in one
year. And this heightened level of insecurity is an equal opportunity problem, "There is a clear long-term upward trend in the economic insecurity of American families…it has risen across virtually all parts of American society – it‟s an issue squarely confronting the American middle class", according to Yale political science professor Jacob Hacker, who conducted the study.
And there is a lot to be insecure about. A recent study by the Pew Center showed that 48% of households are in worse financial shape than before the recession. And of those households, 63% believe it will take at least three years to recover. Three years to get back on track, in the face of lingering unemployment, declining home values, and the threat of a double-dip recession is a long, painful road.
But most believe we aren‟t even on that road yet. According to the Pew Center study, 54% of people believe we are still in a recession.
Source: Pew Research Center
At this point, we have a preponderance of evidence telling us that we are losing ground. And the very real possibility of a double-dip recession has cast a shadow over the rest of 2010.