Worker productivity is down, indicating businesses have more employees than needed to meet demand, and layoffs will follow if sales don't pick up. Conditions in Europe and a weaker euro and Chinese yuan, indicate exporters and import-competing businesses face a tougher environment this summer.
Retail sales slipped in April and May, as consumers exhibit new caution about taking on debt. Auto sales are off their first quarter peak.
In manufacturing, the bright star of the recovery, new orders fell the last two months and factory output was down in May, notably for autos, appliances and computers.
Throughout the economy businesses report falling prices -- slashing prices to sustain sales is an ominous indicator of more layoffs.
The Federal Reserve has pulled all the levers that could make a significant difference. Short-term interest rates -- such as the overnight bank borrowing -- are already close to zero.
When the Federal Reserve Open Market Committee met in April more bond purchases to push down long-term Treasury and mortgage rates were on the table. Since, risk-averse investors have moved cash from Europe to U.S. securities. The 30-year Treasury and mortgage rates are near record lows, preempting the effectiveness of further Fed action.
Should conditions worsen in Europe, the Fed can shore up U.S. banks with exposure to European financial institutions. However, those actions would not offset lost U.S. exports across the Atlantic, or in Asia that compete with European products benefiting from a cheaper euro.
Lost exports could easily slice $120 billion from U.S. GDP, destroy over a million jobs and raise unemployment to 9% -- and a meltdown in Europe could trigger even worse conditions.