In the latest sign that the economy is decelerating at a quickening pace, today's job report from ADP showed that private employers added only 38,000 in May.
Economist expected private companies to add about 175,000 jobs for the month.
The report is the latest in a series of disappointments on the economic front.
Home sales have continued to lag, GDP has been revised sharply downward, and inflation has taken a larger bite out of corporate and family budgets. A recession is not out of the question.
When economists are this far off, one has to start looking at their underlying assumptions.
They all went to the same schools and continue to use the same math that gave us derivative products that produced sub-prime and related disasters.
On Friday, the Bureau of Labor Statistics will release its nonfarm payroll report which includes government jobs in addition to private job data. With state and local governments juggling to balance their budgets, government employment is expected to shrink as they lay off workers.
This month the Federal Reserve will end its controversial QE2 program which could slow growth even more.
The public has become increasingly skeptical of public stimulus spending, which means that the government is running out of its preferred policy means of spurring the economy.
From here on out, Obama has only two options left:
- Cut taxes across the board
- Suspended regulations that stifle business
Of course he'll do neither between rounds of golf.
As I observed last week, in This is What Stagflation Looks Like, even as world equity markets move down with signs pointing to slowing global economic growth, a European Central Bank member is warning about inflation.
"We have to take seriously the April rise in long-term inflation expectations and take it as a sign of increasing price perspectives when monetary policy is expansive," said Jens Weidmann, the head of Germany's Bundesbank.
Translation: We need to tighten up money to combat inflation.
Tighter money supply means slower growth, fewer jobs.
This really is what stagflation looks like.