The economic recovery in the United States is hitting a major wall of resistance. In early 2010, the recovery seemed to be doing quite well. Unemployment was falling, retail sales were increasing, and economic growth as measured by GDP was expanding. It all seemed so rosy.
But when the European Debt Crisis fully erupted in the spring, the global economic recovery began to show signs of faltering. Then in June and July, key economic data out of the United States disappointed to the downside quite strongly. By mid-June it became very clear the U.S. recovery was in trouble, and in late July Federal Reserve Chairman Ben Bernanke basically sealed the deal and removed all doubt from the market when he stated before Congress that the economic outlook for the United States in the 2nd half of 2010 is “unusually uncertain.” It was official—the Federal Reserve had no clue how bad things were going to get.