Dark Clouds gathering once again?

I have been gently warning clients over the past year or so that we may well see a return to recession, both in the UK and US. Whilst both economies have managed, thus far, to avoid the so-called "Double Dip", growth seen in the first quarter of 2011 has been anaemic at best.  But it was growth none the less and had given comfort to investors that the worst was behind us.

However, recent data from both sides of the pond have suggested that we may yet be sucked back into the recessionary abyss.

US unemployment had been showing healthy signs of improvement over the first few months of 2011, but May's print fell far short of expectation, and the unemployment rate, which had been falling, nudged back up to 9.1%.

Closer to home, this morning's British Retail Consortium data for May showed UK retail sales falling 2.1% from the same month a year ago. This is clearly worrying data, and shows the fragile position the UK economy is in. Consumers, battered from inflation, weak wage growth or fears of redundancy, are simply not prepared to splash out on the big ticket items. We expect retail sales to remain poor through the rest of 2011, and one wonders how many of the straggling retailers will follow Focus DIY and Oddbins and fall by the wayside.