The bulls may be celebrating America’s stronger-than-expected 2Q GDP data, but most other data coming from the US smells pretty rotten. Unemployment reached a five-year high of 6.1% in August. The number of foreclosures continues to break new records. And last week, Integrity became the tenth US bank to go under this year. Kate Incontrera says anyone that was hoping for a speedy US recovery better think again…

This from The Daily Reckoning:

The Labor Department reported today that the United States lost more jobs than forecast for August and that the unemployment rate rose to a five year high. The data also indicated that home builders, financial firms and the service industry has trimmed down their payrolls – a clear sign that the effects of the housing slump and subsequent credit crisis are being felt.

“We’re losing jobs in all kinds of industries now,” Roger Kaubarych, chief U.S. economist at UniCredit Global Research in New York, said in an interview with Bloomberg Radio. “This is the clearest recessionary signal we’ve seen.”

The rest of the world is getting the signal as well…markets across the globe are sinking. Apparently, they still had some hope in a speedy U.S. recovery, but no such luck.

Last Friday marked the 10th U.S. bank failure of 2008, as regulators took over Integrity Bank (ah, the irony). How anyone believed the U.S. was on the road to recovery is beyond us.

Bill Gross of Pimco didn’t do much to squash these global fears as he made a plea for further government intervention (i.e., releasing more cash). “This rarely observed systematic debt liquidation is what confronts the U.S. and perhaps even the global financial system at the current time,” Gross wrote on Pimco’s website. “Unchecked, it can turn a campfire into a forest fire, and a mild asset bear market into a destructive financial tsunami.”

Still not convinced that the strong second quarter growth was nothing more than a mirage? Here’s something that may change your mind: A report released by the Mortgage Bankers Association today shows that a record 1.249 million homes were in foreclosure during the second quarter. In addition, from the end of March to June 30, 2.9 million homeowners were delinquent on their mortgage payments – up 25% from the same time period last year.

Our friends at Strategic Investment warn that there is an even bigger property bust on the horizon – in commercial property.

The bust could be worse for banks, stocks and the U.S. economy as a whole than the current residential debacle…an almost unbelievable notion. Bloomberg says that the United States could see the worst drop in commercial property since the 2001 recession and Morgan Stanley is calling for a 15% drop over the next two years.

Source: Making a Bad Situation Badder