Is the Wimpy Recovery Morphing into a Recession?

We’ve just begun coming to grips with the wimpy recovery. Are we actually in for another recession? That was the implication of a couple of economic reports I read this week, including one by ITG Investment Research, which tracked how the pace of this recovery (which was never great to begin with) has by some measures been slowing, particularly among middle-income consumers and industries producing for overseas markets. (Europe is definitely in a double dip, and many emerging markets are slowing too, as I’ve written about many times.)

One of the most interesting snippets from the report: While there are fewer goods on sale in American malls and retail shops than there were last year around this time, what is on sale is being discounted at much steeper rates — and not just at dollar stores but at outlets catering to middle- as well as lower-income people.

That’s not surprising given that the gains we’ve seen during this recovery have mainly gone to the upper classes. Stocks are up, but it’s mostly rich people who own those. The residential real estate market, where most Americans keep the majority of their wealth, is still down. (I met Robert Shiller for lunch last week, and he said we’ve got years of pain to go on that front.) Salaries are also down – there’s been almost no growth in real income throughout the wimpy recovery. Read more.......