While there is evidence that the U.S. housing market has finally bottomed out after six years, we wake today to find an adjustment to the Q2’s Gross Domestic Product numbers. Last quarter’s were bad enough at 1.7%, but now they’ve taken a precipitous fall –by 40%–to 1.25%.
What does it mean? According to the American Enterprise Institute’s Jim Pethakoukis there’s a 50% chance of recession within a year and 8%
unemployment as far as the eye can see. In other words we’ve now entered the recession RED ZONE:

“U.S. economic growth is dangerously slow. I’ve frequently written about research from the Fed that finds since 1947 when two-quarter annualized real GDP growth falls below 2%, recession follows within a year 48% of the time. (And when year-over-year real GDP growth falls below 2%, recession follows within a year 70% of the time.
Citigroup has also taken a shot at determining the stall speed: “Specifically, when U.S. growth has cut below 1½ percent on a rolling four-quarter basis, it has tended to fall by nearly 3 percentage points over the following four quarters, and the economy has typically entered recession.
Bottom line: Growth the past two quarters has averaged about 1.6%. Not only does this mean the economy is growing more slowly than last year’s 1.8%, it is also slow enough to signal about a 50% chance of a recession within a year. And the third quarter also looks weak
The anemic, three-year-old U.S. recovery is already running out of steam. And if it does, it may be several more years before we see unemployment below 8%.