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Is the recovery at a typical pause?

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Kai Ryssdal: For those tracking the health of the American economy, today brought a veritable cornucopia of economic data. Sadly, none of it all that appetizing. Manufacturing growth has slowed. Pending home sales are down. There are some worries that the June unemployment report tomorrow morning is going to be ugly. Which then leaves this gaping hole in the analysis. Is the recovery slip sliding away? Or is the economy just pausing to catch its breath?

Jeff Horwich reports.

Jeff Horwich:What should we make of this raft of bad news? Into the void this morning stepped the one-time sage of Wall Street. Former Federal Reserve Chairman Alan Greenspan was chatting over coffee on CNBC, when he dropped a little economic bomb.

Alan Greenspan: What we’re looking at is an invisible wall, which essentially — as far as I can see — is a typical pause that occurs in an economic recovery.

“Typical pause” — that’s typical Greenspan. Seems like such a boring phrase, but to economist Heather Boushey, them’s fightin’ words.

HEATHER BOUSHEY: That is ridiculous. I wouldn’t say that this is a typical recession, and I don’t think that at this point in this particular nascent recovery a pause is anything to not be very concerned about.

Boushey is senior economist with the Center for American Progress. Here’s what’s not typical, she says: Halfway through 2010, unemployment claims still aren’t falling.

BOUSHEY: That is incredibly worrying, and that’s not the kind of trend we’ve seen in previous economic recoveries.

In Greenspan’s corner you’ll find John Canally, economist with LPL Financial. Canally likes to call it a “soft spot” in the recovery. But “typical pause” — that’ll work.

JOHN CANALLY: And it’s not just happening this time. It happens at this point in every recovery.

Canally says midway through every recovery since the 70s, the economy goes into what he calls “two-step forward, one step back” mode.

CANALLY: You usually see consumer confidence drop, you see various other measures of the economy kind of flatten out a little bit.

Canally says he puts the labor recovery right in the middle of previous recessions. You might even say, it’s “typical.”

I’m Jeff Horwich for Marketplace.

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