The recovery is over.
So says UCLA economist Ed Leamer. He notes that May brought the first year-over-year decline in the Pulse of Commerce Index of domestic diesel fuel use since the end of 2009 – the latest yellow flag to be raised over the sputtering U.S. economy.
The index, which indirectly tracks industrial production via trucking mileage, has now declined in four of the five months this year and in eight of the past 12. The weak showing doesn't say a recession is at hand, but it means the economy has stopped closing the gap between its actual output and its pre-recession potential growth trend, Leamer says.
That gap, currently around 11% of potential gross domestic product, is not going to get any narrower till we see U.S. output expanding at a rate above 3% -- something that doesn't seem to be in the cards this year. Even skeptics of the U.S. growth story such as Leamer had hoped to see a little better performance in May.
"I was optimistic we'd have a better month," says Leamer, who oversees the Pulse of Commerce Index along with data provider Ceridian. "But it looks now like the recovery ended last summer, which means we're just idling." …
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