In this Thursday, May 31, 2012, file photo, job seekers gather for employment opportunities at the 11th annual Skid Row Career Fair at the Los Angeles Mission in Los Angeles. The global economy’s foundations are weakening, one by one. Already hobbled by Europe’s debt crisis, the world now risks being hurt by slowdowns in its economic powerhouses. (AP Photo/Damian Dovarganes, File)
WASHINGTON (AP) — The global economy’s foundations are weakening, one by one.
Already hobbled by Europe’s debt crisis, the world now risks being hurt by slowdowns in its economic powerhouses.
The U.S. economy, the world’s largest, had a third straight month of feeble job growth in May. High-flying economies in China, India and Brazil are slowing, too.
Fears of a global economic downturn have sent investors rushing toward the safest possible investments: U.S. and German government bonds. As a result, the interest rate on the 10-year U.S. Treasury note has hit a record-low 1.46 percent. The rate on the German 10-year bond is even lower: 1.17 percent.
“Treasurys are at 1.46 because people are freaking out,” says Mark Vitner, senior economist at Wells Fargo Economics.
The gravest fear is Europe. The most urgent threat is that in mid-June, Greek voters will reject the terms of a $170 billion bailout — which called for painful budget cuts — and abandon the euro. The move could ignite economic and financial chaos as Greek debts shift from denominations in euros to Greek drachmas of uncertain value.
Yet the global economy’s troubles go well beyond Greece. Here’s a look at the global economy’s vital signs:
— UNITED STATES
American employers added just 69,000 jobs in May. Since averaging a healthy 252,000 a month from December through February, job growth has slowed to a lackluster average of 96,000 a month.
On Friday, after the government issued the May jobs report, the Dow Jones industrial average sank 275 points. It was the Dow’s biggest loss since November, and it’s now down 0.8 percent for the year.
The dismal news suggested that the U.S. economy is enduring a midyear slump just as in 2010 and 2011.
Unemployment rose to 8.2 percent from 8.1 percent in May as 642,000 more Americans poured into the work force, and only 422,000 more people got Login to read more