We are not talking ice cream here. However, one must admit that the market’s recent reaction to bad news seems to have many thinking that the economy could slip back into recession. Remember, we had plenty of bad news last year and early this year, but the markets kept on advancing. Just last week, CNN/Money addressed this possibility in an article. The findings? 'Some economists think a double dip is even less likely than it was earlier this year. David Wyss, chief economist with Standard & Poor’s, said that even though he thinks slower U.S. growth is practically a sure thing, the odds of a double-dip actually have shrunk to 20% from 25% earlier this year. Same goes for Derek Hoffman, founder and editor of The Wall Street Cheat Sheet, who also puts the odds of a double dip at 20%, when just a few months earlier he saw them at 50-50.'

We keep pointing out that the economic news continues to be positive. The Federal Reserve Board’s 'Beige Book' indicated continued strength across the nation. However, some districts are experiencing a slowdown and the latest retail sales release confirms these findings. So it begs the question: is the economy’s growth slowing in an example of a recovery experiencing 'stops and starts' or is it possible that we will slip into recession? For now, the experts are telling us that a recovery is continuing. However, with stubbornly high unemployment rates and a struggling real estate sector, it just does not feel good. Meanwhile, the markets continue to bounce around violently. For those who are invested in stocks, real estate or any other form of commodity, these are not times for the faint of heart. For those with weak hearts, we suggest you go on vacation for a few months and then go back and read the box scores.

First-time homebuyers looking to land an $8,000 federal income tax credit may have a little more time to close on their purchases if a Senate amendment unveiled Thursday makes it into law. As it stands now, homebuyers must have signed contracts by April 30 and must close the deal by June 30. They could be eligible for an $8,000 tax credit if they are first-time buyers or a $6,500 credit if they owned and lived in their previous home for five of the last eight years. The closing deadline, however, could be pushed back to Sept. 30 under an amendment offered by Senate Majority Leader Harry Reid, D-Nev., Sen. Johnny Isakson, R-Ga., and Sen. Chris Dodd, D-Conn. The senators said they want to make sure banks have time to process the transactions, especially short-sales, which is a more involved process. 'By extending the transaction deadline, we can ensure that everyone taking advantage of this credit can complete the purchase of their new home, Reid said. It remains to be seen, however, whether the amendment will go anywhere. It’s part of a controversial jobs and tax bill that may be radically changed before the Senate approves it. Lawmakers are not scheduled to vote on the bill until next week at the earliest. Source: CNNMoney.com

Builders, designers, and architects say now is a great time to build a new custom home or remodel an existing one. Not only are there plenty of unemployed and under-employed workers available, but also property is for sale at bargain prices and construction materials are at bargain levels. 'It makes a lot of sense right now,' said Stephen Melman, director of economic services for the National Association of Home Builders. 'People are available to do the work. They are going to bid competitively so I’m sure that will drive the price down.' The only problem could be financing, which can be hard to arrange. Source: Investor’s Business Daily

The vast majority of potential home buyers – 87 percent – plan to use a Federal Housing Administration home loan to finance their purchases, according to a new survey from the Home Buying Institute, a consulting service. In a survey of 12,000 home shoppers consisting of two-thirds first-time buyers, nearly 54 percent said they preferred an FHA loan because it requires a small down payment. The remainder chose an FHA loan for these reasons: 19.2 percent thought the qualification process would be easier; 13.5 percent said they didn’t think they could qualify for a conventional loan; 7.7 percent said they had bad credit; 5.8 percent said their income was too low to qualify for a conventional loan. Source: Home Buying Institute

AP

Sales at U.S. retailers unexpectedly fell in May for the first time since September following a record slump in purchases of building materials, adding to fears the economic recovery was losing some steam.

The Commerce Department said total retail sales dropped 1.2 percent, the largest decline since September, after rising by an upwardly revised 0.6 percent in April. Sales in April were previously reported to have increased 0.4 percent.

Analysts polled by Reuters had forecast retail sales rising 0.2 percent last month.

Retail sales, which had risen for seven straight months, were up 6.9 percent compared to May last year.

"There's no getting around the fact you saw some consumer retrenchment in the month of May. The number is going to call into question the strength of consumer spending for the second quarter," said Kevin Flanagan, chief fixed income strategist at Morgan Stanley Smith Barney in Purchase, N.Y.

The decline in sales follows a report last week showing private businesses unexpectedly held back on hiring in May after expanding payrolls for two months, a trend which could undermine recovery from the worst recession since the 1930s.

Restoring the economy to health is a key priority for President Barack Obama and voter anguish over the slow pace of the recovery could inflict heavy losses on the Democratic Party in November's Congressional elections.

Sales last month were dragged downed by a record 9.3 percent drop in receipts from building materials and garden equipment suppliers, which could reflect a drop in construction following the end of a popular homebuyer tax credit.

Motor vehicle and parts receipts also fell 1.7 percent, although dealers reported a rise in sales.

Excluding autos, sales fell 1.1 percent in May, the largest decline in 14 months, after rising 0.6 percent in April.

Markets had expected sales excluding autos to gain 0.1 percent.

However, core retail sales—which exclude autos, gasoline and building materials—rose 0.1 percent after falling 0.2 percent in April. Core sales correspond most closely with the consumer spending component of the government's gross domestic product report.

Clothing and clothing accessories sales dropped 1.3 percent, while gasoline receipts fell 3.3 percent, the largest decline since March 2009.

There were a few bright spots in the report, with sales at sporting goods, hobby and book stores rising 0.4 percent in May after falling 1.3 percent in April.

Receipts at electronics and appliance stores increased 0.6 percent, reversing the prior month's fall.