The drumbeat of lousy economic news seems to get louder by the day.
Foreclosures rage on. Spending is stagnant. Job growth, anemic at best. Tuesday, we learned that sales of previously owned homes hit a 15-year low in July. Then Wednesday came word that new home sales were even worse, while business spending on big-ticket goods sank to January 2009 levels.
"There remains no let-up in the barrage of bad news," said Mike Englund, chief economist at Action Economics, in a research note.
Yes, the thumps keep coming, and that has more people talking openly about what, just a few months ago, seemed highly unlikely: double-dip recession.
Most experts say the odds are still against our economy actually shrinking again. But after a burst in the spring, growth lately has become so weak that it seems like a possibility to more and more people. This raises the question: How will we know? What should we be looking for?
To many economy-watchers, the most troubling news in the last few days came in Wednesday's numbers on durable goods orders — cars, computers, big equipment — which grew far slower than expected. Strip out transportation equipment and defense spending, and orders for so-called "core capital goods" — a key indicator of business spending — fell 8 percent.
"The rebound in manufacturing was one of the bright spots in an otherwise disappointing recovery," said Paul Ashworth, senior U.S. economist at Capital Economics. "Take it away, throw in a relapse in housing, and you don't have much left."
It is the sort of news that has the gurus at Clayton-based Macroeconomic Advisers lowering their expectations for the next few months.
The respected forecasting firm is now projecting growth in the second quarter, which ended June 30, to have been 1.25 percent, or barely half the rate it thought just a few weeks ago. Third quarter gross domestic product, they now say, will come in at around 1.7 percent, down from earlier predictions of 2.5, and well below the 3 percent clip generally regarded as healthy.
"The second and third quarters are looking to be decidedly subpar," said Ken Matheny, the firm's senior economist. "It looks like we're in for a bit of a slog."
A slog makes sense, said Scott Colbert, head of fixed income investing at Commerce Trust Co. Subtract out record rates of borrowing over the last decade, and economic growth would have been more like 1 to 1.5 percent annually, almost exactly what we are seeing now after two years of companies, consumers and banks squeezing out debt.
"This is what we're left with," he said. "I don't know why that's terribly surprising to anyone."
Businesses, Colbert said, have mostly healed their balance sheets. But it will take more time for consumers to do the same. And government, even longer. Until that happens, the economy may keep its head above water, Colbert said, but not by much.
"We may just be flying at a slower speed," he said. "If you stall, it's a much more dangerous situation."
Still, the news isn't all bad.
St. Louis-area employers have begun to bring back the jobs they cut, adding about 12,000 since the start of the year, according to figures from the federal Bureau of Labor Statistics. Big retailers such as Von Maur and Nordstrom Rack are making a bet on consumer spending by opening their first stores in the region this fall. And Wednesday, homegrown biotech research firm Leinco abandoned plans to move to Florida and said it would put a $4.75 million expansion, and 48 new jobs, in Fenton.
Those sort of factors — businesses buying equipment and consumers opening their wallets — will be essential to any sustained recovery, said Matheny, especially with the $787 billion federal stimulus starting to taper down and seemingly no political appetite for another dose.
But will they happen? We just don't know, Colbert said.
"I'm as cloudy and confused as I've ever been with a forecast right now," he said. "And I wouldn't want anybody to tell you they have a sense of certainty about their prognostication."
In other words, we will all have to wait and see.
The Associated Press contributed to this report.
