Are We Entering Obama's Recession?

Gasoline is going to hit a record high $5 a gallon this year. What do you think that will do for the economy? People are already driving less, which means they are spending less, preparing for tough times as we near this record predicted to hit for the Memorial Day holiday. Get this, oil consumption is down 5% while prices still rise. Less demand isn't breaking the price increases. This isn't good for Obama's fragile "recovery."

Gallup reports, for the second month in a row, confidence in the economy is slipping. In January 41% of Americans felt the economy was improving. In March that fell to 33%.

The truth is we appear to be heading towards another recession. We have been told there would be a double dip, and as inflation starts to rear its ugly head, the economy is slipping back into sickness.

Bloomberg reports:

The U.S. trade deficit narrowed less than forecast in February, indicating soaring commodity prices hurt the world’s largest economy at the start of the year.

The gap shrank 2.6 percent to $45.8 billion from a larger- than-previously-estimated $47 billion in January, according to figures from the Commerce Department today in Washington. Another report showed the cost of imported goods jumped in March by the most in almost two years.

“Everything was weaker across the board,” Ted Wieseman, an economist at Morgan Stanley in New York, said, referring to the trade data. “Import prices are reflecting surging energy prices,” he said, they “are going through the roof and that has been weighing on consumer spending.”

The median forecast of 71 economists surveyed by Bloomberg News projected the trade gap would shrink to $44 billion. Estimates ranged from deficits of $41 billion to $50.5 billion. The Commerce Department had previously estimated the January shortfall at $46.3 billion.

Morgan Stanley lowered its tracking estimate for gross domestic product in the first three months of the year to a 1.5 percent annual pace from a 1.9 percent forecast prior to the data. Barclays Capital in New York lowered it to a range of 1.5 percent to 2 percent, down a half point. GDP climbed at a 3.1 percent pace in the last three months of 2010.

After eliminating the influence of prices, which renders the figures used to calculate GDP, the trade deficit narrowed to $49.5 billion from $50.3 billion. The figures exceeded the fourth-quarter average of $45.3 billion.

Exports decreased 1.4 percent to $165.1 billion after climbing 2.6 percent in January to a record $167.5 billion. Decreased demand for autos and parts and for capital goods like semiconductors and engines contributed to the drop.

Imports fell 1.7 percent to $210.9 billion after climbing 5.4 percent in January, the biggest gain since 1993. Decreasing demand for autos and petroleum products led the decline.

The world economy will expand 4.4 percent this year and 4.5 percent in 2012, the Washington-based International Monetary Fund said yesterday in its World Economic Outlook report. Developing nations will grow 6.5 percent this year and next while advanced economies will expand 2.4 percent in 2011 and 2.6 percent in 2012, the IMF said.