Second quarter 2011
The economic recovery paused in the second quarter, rekindling bad memories from the Great Recession of 2007 to 2009. Economic growth and consumer spending were hampered by high energy prices, rising unemployment and a disruption in supply chain dynamics caused by the earthquake in Japan. Unemployment increased for the third consecutive month in June; May consumer spending was the worst in the past 20 months; and the Purchasing Managers’ Index fell sharply in May, reverting to late-2009 levels. To make matters worse, fears surrounding the European debt crisis as well as a potential U.S. debt default compounded the weak economic performance. Although the Federal Reserve’s index of leading indicators rose in June and economists initially were predicting a stronger second half of 2011, these remaining positive signs were quelled after the Federal Reserve trimmed its 2011 and 2012 growth projections and increased its unemployment forecast. Following the end of the second quarter, conditions continued to deteriorate as Standard & Poor’s downgraded U.S. debt and global markets were sent into turmoil.
