Stephen Foley: America should avoid a double-dip recession

US Outlook There is no positive way to spin the May unemployment numbers released in the US yesterday. Jobs growth has decelerated sharply in the world's largest economy, the Americans lucky enough to be in employment are working fewer hours, and there is no improvement on the immediate horizon. Temporary employment – usually a signal that businesses' demand for labour has increased and that they will likely add permanent jobs in the near future – was down, too.

The headline number showed just 69,000 new jobs last month, lower than even the most bearish economist's forecast, and that compared to an April figure that was itself revised downward. The construction industry, which had been kept busier than usual in the mild winter, finally ran out of steam. Cash-strapped localand state governments also reduced their headcount.

It all points to a year of sub-par growth, in which that disappointing 1.9 per cent annualised figure for first-quarter GDP is typical of what is to come. The US is not going to be the engine of the global economy this year, it is now clear. China and India are sputtering, too. The kamikaze pilots of the eurozone are still in their austere death spiral. It is not easy to be optimistic.

And yet, the US is still very far from recession, and all these economic woes have unleashed powerful countervailing forces. Oil prices have slid, reducing the pocketbook pressure on US drivers, and interest rates are jaw-droppingly low. The gloomy employment figures sent the yield on 10-year Treasuries below 1.5 per cent for the first time in history. Who needs quantitative easing, when you have that level of monetary stimulus?

The odds are still that the US economy will right itself without a double-dip recession, but it isn't morning in America yet, and that bodes ill for President Barack Obama's re-election prospects.