Double Dip Reality

Not surprisingly, all of the reports for the leading economic indicators are gloomy. Unemployment claims are up, new home sales are down 30% and manufacturing is coming to a halt. All signs point to the double dip scenario, which most economists denied until now. However, there is no denying the direction and size of the numbers. New claims for job benefits jumped by 13,000 to a seasonally adjusted 472,000, the highest level since March, and analysts expect the unemployment rate to edge up slightly tomorrow.

Also, since the recession, the jobless have enjoyed an extra 72 weeks of benefits over and above the 26 normally given. Democrats want to vote to extend them past the 98 week mark, but Republicans are fighting them tooth and nail since they want the extension funded from the remaining stimulus funds. Of course, Democrats want to pile the price tag onto the debt as "emergency funds." This gridlock allegedly troubles economists who say we need to provide jobless benefits so the unemployed can spend the government money and "stimulate growth." It really worries me to think top economists are counting on unemployment benefits to pull us out of the recession. How much can a $400/week unemployed individual stimulate the economy? I expect this type of stupidity from Nancy Pelosi (http://www.foxnews.com/politics/2010/07/01/pelosi-unemployment-checks-best-way-create-jobs/), but from economists?

To make matters worse, the housing market is still plummeting. New home sales fell 30% in May as tax credits expired and the pool of those with the ability to obtain credit shrank. Most analysts expect another 8 to 10% drop in housing prices, which is likely to be followed by more foreclosures.

The industrial sector's growth also slowed in the U.S. as well as in 16 other countries tied to our currency.