April's better-than-expected employment figures notwithstanding, the economy is in a growing funk, says Joe Weisenthal, deputy editor of Business Insider.
In the accompanying interview with his boss and the Daily Ticker's own Henry Blodget, Weisenthal makes several key takeaways.
1. The recovery is losing steam. "I don't think there's any question starting in early March or late February" that the data started heading south, he says pointing to steady increases in initial jobless claims, disappointing ISM surveys, and continually sluggish housing numbers. What about that impressive 244,000 jobs created last month? "It alone is not enough to reverse the trend," he argues.
2. Inflation is NOT out of control. Does $4 gas hurt consumers? "There's no question it hurts a lot," he says. However, on the whole there's little evidence the Fed "has gone to far." Furthermore, he claims it would be foolish for the Fed to raise rates to cool off the economy. "Is it really worth slowing the economy from its current anemic state?" Unfortunately, this could all result in a '70s-style stagflation.
3. The GOP has an ulterior motive in pushing for spending cuts. "They have winning the next election in mind and the best thing for a Republican candidate in 2012 is a significantly weaker economy," he states. The economy is sure to weaken - as witnessed in the U.K. - if austerity measures are put in place, argues Weisenthal.