US recovery splutters fuelling fears of second recession

] Former chairman of the US Federal Reserve, Alan Greenspan, has warned that the US economy could be heading towards a double-dip recession. There is currently a “pause” in the US recovery, he told US television, so that it feels like a “quasi-recession”. When asked if the US could fall back into recession, he replied, “It is possible." Mr Greenspan served as chief of the Fed from 1987 until his retirement in 2006, when he was replaced by Ben Bernanke. His policy of keeping interest rates low has been criticised by some for helping fuel the expansion in the sub-prime mortgage market which contributed to the credit crunch. 'Broke system' “We’re in a pause in a recovery, a modest recovery but a pause in the modest recovery feels like a quasi-recession," he told NBC’s Meet the Press programme. When asked about the chances of another recession, he said: “It is possible if home prices go down. Home prices as best we can judge have really flattened out in the last year." Mr Greenspan also forecast unemployment to remain at its current level of 9.5% for some time. “The financial system is broke and I see we just stay where we are," he said. “There’s nothing out there that I can see which will alter the level of unemployment." The latest monthly US unemployment figures will be released by the Labor Department on Friday. [url:
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] When President Obama first took office at the beginning of last year, his administration pushed through an ambitious $787 stimulus package designed to rescue our country�s economy from the brink of a depression and resuscitate the ailing labor market. As the administration stated repeatedly at the time, the stimulus money was not intended to have an immediate impact, but would instead be doled out in a staggered fashion over the next two years. Now more than a year and half into the program, what have we seen? The country�s economy has started to grow, but not in the way economists hoped. The Gross Domestic Product increased by 2.4% between April and July of this year, but that�s a decrease from the 3.7% it grew in the first three months of the year. The same goes for U.S. job growth. Though the White House announced last month that the stimulus had saved or created 3 million jobs, the current job numbers are far from promising. The Labor Department today announced the economy added 71,000 jobs in July, bringing the grand total of new jobs to just over half a million for the year so far. The unemployment rate continues to sit at an ominous 9.5% while the number of Americans who�ve remained unemployed for six months or longer is stuck at 6.6 million. This grim reality has driven thousands to leave the workforce all together. �We do not yet have a robust jobs recovery and there are few signs in this report of moving in that direction,� said Lawrence Katz, a labor economist and professor at Harvard University. This is all the more worrisome because the economic recovery was supposed to heat up this summer as more stimulus projects were approved, putting people to work. [url=http://www.mainstreet.com/article/moneyinvesting/news/economic-recovery-over?cm_ven=msnetzero:
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] Overall orders for big-ticket manufactured goods increased 0.3 percent in July, the Commerce Department said Wednesday. But that was only because of a 76 percent jump in demand for commercial aircraft. Taking out the volatile transportation category, orders for durable goods fell at the steepest rate since January. And business orders for capital goods took their sharpest drop since January 2009, when the economy was stuck in the deepest recession in decades. Separately, Commerce said new home sales fell 12.4 percent in July from a month earlier to a seasonally adjusted annual sales pace of 276,600. That was the slowest pace on records dating back to 1963. Collectively, the past three months have been the worst on record for new home sales. The weak sales mean fewer jobs in the construction industry, which normally powers economic recoveries. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders. The two reports are likely to stoke fears that the economy is on the verge of slipping back into a recession. They follow Tuesday’s report that showed sales of previously owned homes fell last month to the lowest level in decades. Unemployment remains near double digits and job growth in the private sector is slowing. “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." More [url:
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