Evidence mounts that recovery is hitting the skids

WASHINGTON (AP) - The economic rebound is stalling.

A raft of weak new reports Thursday provided the strongest evidence yet that the recovery is slowing and added to concerns that the nation could be on its way back into recession.

Most notable was a rise in the number of people filing for unemployment benefits for the first time. The four-week average for jobless claims now stands at its highest point since March.

The bleak indicators come just after Congress adjourned for the holiday weekend without extending jobless benefits, and a day ahead of a report expected to show only modest improvement in the national job market.

On top of that, the housing market appears to be slumping again, and the Dow Jones industrials closed down for the sixth trading day in a row. Add in slower growth in China and the Europe debt crisis, and economists are scaling back their forecasts for the U.S.

"When you add it all up, it doesn't imply a double-dip, but it does suggest that growth will be slower than we'd like to see," said Scott Brown, chief economist at Raymond James.

A double-dip recession happens when an economy shrinks, then begins to expand again before going back into reverse. Economists don't agree on a more precise definition.

Senate Republicans, expressing concerns about the ballooning federal deficit, this week blocked a bill that would have kept unemployment checks going to people who have been laid off for long stretches.

More than 1.3 million people have been left without federal jobless benefits after Congress adjourned without an extension. That number could grow to 3.3 million by the end of the month if lawmakers can't resolve the impasse when they return.

Among those waiting for a resolution is Nan Esparza, 59, a single mother of three in Smithfield, N.C., who lost her job as a legal secretary early last year. Her unemployment benefits expired last month. She plans to live off savings.

"After that, I'm in a world of trouble," she said.

States typically provide six months of unemployment help. During the recession, Congress added nearly a year and a half of extra benefits. Democrats want those terms extended through November, at a cost of $34 billion.

Democrats, unable to deliver more stimulus spending for President Barack Obama, had hoped to at least restore the jobless benefits. Congressional Democrats have sought to put moderate Republicans on the defensive by forcing them to vote against aid to the unemployed - pushing it almost as a stimulus with a human face. But they have failed to come up with the votes to stop a filibuster.

Less money in people's pockets could hamper economic growth. JPMorgan Chase economist Michael Feroli lowered his growth forecast for the third quarter to an annual rate of 3 percent from 4 percent, citing tighter government spending.

Other economists expect growth to slow to an anemic 2 percent in the second half of this year. That probably wouldn't reduce the unemployment rate, currently at 9.7 percent.

On Friday, the government's June jobs report is expected to show a modest rebound in private hiring - 112,000 jobs, according to a survey of economists by Thomson Reuters. Unemployment is expected to edge up from 9.7 percent to 9.8 percent.

Adding 112,000 jobs would be an improvement from May, when businesses added only 41,000. But the economy needs to generate at least 100,000 new jobs a month just to keep up with population growth, and probably twice that number to bring down the jobless rate.

In a new sign of job-market weakness, new claims for unemployment jumped by 13,000 last week to a seasonally adjusted 472,000. The four-week average, which smooths fluctuations, rose to its highest level in more than three months. Claims generally need to drop below 400,000 to signal that hiring is ramping up.

The rebound so far has been fueled mostly by government stimulus spending, manufacturing activity and business spending on new equipment and inventories, and those factors are fading.

It's happening as new threats emerge: Stock markets are falling and home prices could drop again, lowering household wealth. Americans could respond by cutting back on spending and weakening the recovery.

Manufacturers reported Thursday that export orders grew at a slower pace in June than the previous month. New surveys suggested growth in China is slowing, which could lead it to import fewer American products.

Meanwhile, governments in the United States and overseas are cutting spending and reining in stimulus measures. Some economists worry those steps are premature as long as the economy remains weak.

There was also another fresh sign of trouble in the housing market. The number of buyers who signed contracts to purchase homes tumbled 30 percent in May, the National Association of Realtors said. Construction spending also declined for the month. Both were affected by the expiration of government incentives to buy homes.

Separately, the Institute for Supply Management, an industry trade group, said its manufacturing index slipped in June. But it is still at a level that suggests growth in the industrial sector, which has helped drive the economic recovery.