Alert: The U.S. has likely relapsed into recession.
This shouldn't surprise anyone. The drivers of U.S. growth - consumer spending, chiefly, but also government spending, have stalled and been cut back, respectively. Cassidy's message to Tea Partiers: the proof is in, government cutbacks have been a drag on the economy.
You would expect this news to be splashed across world front pages, notably the NYT, FT and WSJ. But the officially released government figures don't quite show a recession, but a marked slowdown - bad enough news, to be sure.
Cassidy's gone to the trouble of drilling deep into those official figures released by Uncle Sam and make some inevitable conclusions from what he finds. To start with, figures on GDP growth are always annualized, and so they measure the economic activity in a given quarter multiplied by four. When you divide by four for this year's first two quarters, as Cassidy does, you find the U.S. economy has gone into stagnation.
Worse, as in Canada, official GDP and leading indicators released by government and high awaited by all - such as this week's latest U.S. job numbers - are almost always subsequently revised. This year's Q1 GDP numbers were later revised sharply downward, and looking at the fundamentals since then, Cassidy I believe is right in expecting the anemic Q2 numbers to meet a similar fate.
Post-recession, a recovering economy typically grows at a torrid 6% or more. In stable times, healthy GDP is 3%. By contrast, GDP "growth" so far this year has been a negligible 0.1% in Q1 and 0.3% in Q2. And that second figure is subject to (likely downward) revision.
Unless consumers, who account for more than two-thirds of GDP, go on a spending spree in the second half, the U.S. will show "negative growth" for the year. That is to say, recession. With unemployment still high, house values still dropping, and governments still slashing budgets, that's a very unlikely prospect. "I think," says Cassidy, "it is fair to say that the dreaded double-dip recession is at hand."