Europe back in recession: Are we next?

The economies of many European nations are contracting, sending them back into a recession they just came out of last year. Greece, Portugal, and Spain are now all officially in a recession, and France, the Netherlands, and England aren't far behind.

It is a bitter pill for Great Britain:

Britain's economy has fallen into its second recession since the financial crisis after an shock contraction at the start of 2012, heaping pressure on Prime Minister David Cameron's government as it reels from a series of political missteps.

Britain's Conservative-Liberal Democrat coalition has seen its support crumble after weeks of criticism over unpopular tax measures in last month's budget, and is under further pressure from revelations about its close links with media tycoon Rupert Murdoch.

With local elections taking place on May 3, there could hardly be worse timing for Wednesday's news from the Office for National Statistics that Britain's gross domestic product fell 0.2 percent in the first quarter of 2012 on top of a 0.3 percent decline at the end of 2011.

Most economists had expected Britain's economy to eke out modest growth in early 2012, but these forecasts were upset by the biggest fall in construction output in three years, coupled with a slump in financial services and oil and gas extraction.

Cameron said the figures were "very, very disappointing".

The question on many Americans' minds is can it happen here?

A few months ago, economists were optimistic that the rest of this year would see steady, but modest growth in the economy with job creation lagging slightly.

And now? A slew of bad news reports from consumer confidence to job creation over the last several weeks has many wondering if the economy is slipping again.


Demand for long-lasting manufactured goods was the weakest in three years in March and a gauge of business spending plans fell, suggesting the economy lost momentum as the first quarter drew to a close.

In addition to weakness in factory gauges, jobs growth slowed sharply last month and consumer confidence ebbed.

Durable goods orders dropped 4.2 percent, the largest decline since January 2009, the Commerce Department said on Wednesday after a downwardly revised 1.9 percent increase in February.

Economists had forecast orders for durable goods, which range from toasters to aircraft, falling 1.7 percent after a previously reported 2.4 percent rise in February.

"This adds to the evidence that momentum in the economy sort of fell flat in March," said Ellen Zentner, a senior economist at Nomura Securities in New York.

The data came as officials at the Federal Reserve met for a second day to deliberate on policy. The central bank is not expected to make any policy changes and will issue its statement at the end of the meeting around 12:30 p.m. EDT (1630 GMT).

Stock index futures pared gains on the data, while prices for Treasury debt pared losses to stand little changed. The dollar extended losses against the yen.

The report was the latest to show the manufacturing sector losing a step in March and it added to signs that the economy ended the first quarter on a soft spot.

Data last week showed industrial production was flat in March for a second straight month, while some gauges of regional factory activity weakened in April.

Some economists are saying that March was an anomaly because of the extremely mild temperatures in late winter that skewed data for the first quarter. This could be true - or we may be looking at another plunge into negative growth.

Economists are already revising growth rates for the year - downward. At less than 3% to begin with, that's hard to do without wondering how low growth can go.