Perfect Storm of Bad Economic News

A perfect storm of bad economic news has emerged in the past week, leaving many Americans to wonder when the gloomy forecast will end.

After a near-400-point plunge in the stock market Friday, some legislators, including Democratic presidential nominee Sen. Barack Obama, are calling for a second stimulus package to jump-start the sputtering economy.

The chairman of the House Finance Committee, Rep. Barney Frank, D-Mass., is pushing for the federal government to provide direct aid to state and local governments to help homeowners facing foreclosure.

There are some indicators that the tax rebate checks that many Americans received as part of the first economic stimulus package have had a positive affect.

Preliminary numbers show an uptick in sales at low-cost retailers such as Wal-Mart and Costco. A clearer picture of consumer spending will come on Thursday with the release of retail sales figures for the month of May.

But today all eyes are focused on the New York Mercantile Exchange, where oil is traded.

The price of oil rose Friday by $10.75 to hit $138.54 a barrel. Over the weekend the national average price of a gallon of gas passed a record $4 mark.

If oil prices remain near $139 a barrel, gas prices will likely rise another dime in coming days, Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service in Wall, N.J., told the Associated Press.

Tight supply, tensions in the Middle East, the weak dollar and wild investor speculation on oil trading are all contributing to the rising prices.

Some energy experts predict that oil prices could hit $150 a barrel by July 4, with gas topping out at $4.50 a gallon. Oil prices would likely retreat after that to about $100 a barrel, according to some experts. Once the summer driving season is over, the price at the pump should also decline.

The latest unemployment figures were also grim, showing that the U.S. lost another 49,000 jobs in May, creating a half-point rise in the unemployment rate, from 5 to 5.5 percent.

Employers have been cutting jobs for five straight months, with the hardest-hit sectors in manufacturing, retail and construction – unsurprising given the housing market collapse.

A bright spot in the job market includes health care, a sector that added 34,000 jobs last month. Restaurants and bars added 11,000 jobs last month, perhaps because more people are going out to drown their sorrows.