THE US economic recovery has taken another summer vacation but this time it may be an extended hiatus.
After an uneven few months during which the slowdown seemed limited to Europe and China, American data has become more consistent: consistently bad.
First, the unemployment rate ticked up in May. Then, retail sales fell for the second straight month in May, declining 0.2 per cent. It was the first two-month drop since the doldrums of the 2009 financial crisis.
On Friday, a May reading of industrial production and an index of factory activity growth in the New York region registered a near standstill. The economy has shown a tendency to slacken in the summer and strengthen in the winter in recent years. But some economists see parallels to the creeping rot in the data during the run-in to the last recession.
"By our analysis, the US economy is presently entering a recession. Not next year; not later this year; but now," wrote John Hussman, head money manager, Hussman Funds, in his weekly comment. The debts that caused the last recession were never repaid, Mr Hussman argues, merely shifted to national treasuries.
A smattering of US multinationals have also sounded the alarm. McDonald's showed how the European crisis could eat into American business when it warned that its growth would be hurt by reduced spending across the Atlantic.
Smaller companies such as chip maker Lattice Semiconductor have also cut earnings projections because of struggles in Europe. Traders dump the shares of global banks such as Citigroup whenever Spanish and Italian bond yields spike, wary of their investments and business lines in Europe.
The recovery never even reached a large contingent of the American work force. The unemployment rate has now been above 8 per cent for nearly four years. Last week, new jobless claims rose yet again and another major global employer, Nokia, said it would cut another 10,000 more workers.
Economists say part of the unemployment problem is lingering trauma from the 2008 financial shock. Corporations and governments have yet to regain confidence in economic growth and financial stability. Boardrooms are still wary of adding salary and wage expenses, according to one strategist.
"These companies have become so efficient at what they do, that with a slow recovery as we are seeing, they can continue to produce more without having to hire anyone else," said Joe Kinahan, chief derivatives strategist at TD Ameritrade. "This is a phenomenon that could continue for a while and across so many industries. We cannot say that we have truly recovered until people are back to work and the consumer is comfortable spending money."
Others argue that the recovery is still hanging on by a thread. After all, they say, most surveys of the manufacturing and services sector are still in growth territory - just. The Labor Department's monthly reports are still showing jobs growth, however slight. New weekly unemployment claims are still below the 400,000 level associated with recession - barely. The charts are zig-zagging, but still on an upward trajectory, the bulls argue.
"The economy in the US is recovering but it's much slower and much bumpier than most had hoped when looking at the first-quarter data," said Oliver Pursche, president of Gary Goldberg Financial Services.
Some even see positive developments from the latest growth scares. Oil prices have slid because of fears that demand is waning.
"We expect falling gasoline prices to boost discretionary income and support a revival of pent-up consumer demand in 2012," said economists at Nomura Securities, in a research note.
The problem is that the US must avoid many pitfalls to sustain the 1.9 per cent growth rate of the first quarter, or return to the 3 per cent growth of the fourth quarter,
If the US is not already in recession, a euro collapse, a dismantling of health-care reform or a "fiscal cliff" - simultaneous tax hikes and budget cuts - could easily get it there.