Is the U.S. Recovery Hitting a Brick Wall?
The major disappointments in this morning’s economic reports suggest that the U.S. recovery is hitting a brick wall and could slow more dramatically from here on forward. The two sectors of the economy that once led the recovery are turning south quickly. For the second month in a row, manufacturing activity as measured by the national ISM index slowed. Although activity is still increasing in general, the pace of improvement was the weakest since January. A strong currency and headwinds in other parts of the world are beginning to take a toll on the U.S. manufacturing sector. Unless the dollar starts to weaken, it may be difficult for manufacturing activity to improve. It is particularly worrisome that the same troubles are affecting China. The government’s PMI index fell for the second month from 53.9 to 52.1 but conditions are probably worse given that HSBC’s calculation put Chinese manufacturing activity at the weakest levels in 14 months. If the recovery is slowing in both the Ame
