Fed was right: Last week the US Federal Reserve softened its view about the health of the US economy, weakening the tone of the post meeting statement and alerting the true believers that their continuing optimism about the strength of the recovery was looking wrong. On Friday the Fed’s softening was confirmed by the news that the annual growth rate in the economy in the March quarter fell to 2.7%, less than half that of December’s 5.6%. The US Commerce Department revised growth downwards for the third time, from the 3% second estimate and the 3.2% first estimate in April.

It’s very weak: Canadian economist Dave Rosenberg reckons many analysts can’t see how weak the recovery in America is. He wrote to clients on Friday night: “Once you strip out the huge contribution from inventories, you can see what is really happening in the economy and it is far from encouraging. Real final sales are now estimated to have come in at a tepid 0.8% annual rate — down from the prior revision of 1.4% and the 1.6% rate of growth when the data were first released at the end of April. Over the past four quarters, real final sales — the key guts of demand in the economy — have registered the grand total of 1.2% at an average annual rate in what is the weakest recovery in modern history.”

No real growth: The first estimate for second-quarter growth is due July 30, when the Commerce Department will also issue its annual revision to growth figures covering the past three years. Now those restatements could be very interesting. The Commerce Department also said that the current-dollar GDP — the market value of the nation’s output of goods and services — increased 3.9%, or $138.6 billion, in the first quarter to a level of $14,592.4 billion. In the fourth quarter, current-dollar GDP increased 6.1%, or $211.7 billion. The Economic Cycle Research Institute’s weekly leading index hit a new 45-week low last Friday of minus 6.9%. Minus 10% is where the recession warning is triggered.

Failure: the US banking growth industry continues. Last Friday, three small local lenders falling over and closing Friday. That brought the tally of total US bank failures so far this year to 86 (and for the first six months of this year). Banks in Florida, New Mexico and Georgia were shut. Last year, 140 banks closed, compared with 25 in 2008 and three in 2007. A total of 251 US banks have failed since the start of 2007, including the biggest of all in Washington Mutual. The main regulator, the Federal Deposit Insurance Corp, said it expects failures will peak in the third quarter, but is now warning that economic threats could cloud recovery for the banking sector. There were 775 banks on the FDIC’s confidential “problem” list at the end of March.

Georgia and Florida: the two epicentres of the slump for banks. The closure in Florida was the 14th in the state this year, but is the same number as for all of 2009 (28 in 18 months). That makes Florida one of the black holes of US property and banking failures. But top of the flops is Georgia and Friday’s shutdown was the ninth this year so far and 39th since 2008. Strangely the management and board of the Atlanta Federal Reserve remains in place, despite overseeing these disasters.

BP watch: on Friday BP shares fell 6% in New York amid more talk of possible bankruptcy, the rising cost ($US2.35 billion and no end in sight) and ‘helpful’ suggestions from investment banks that the oil giant needed to raise cash. “The cost of the response to date amounts to approximately 2.35 billion dollars, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and federal costs,” BP said in a statement on Friday. Total market losses for the embattled oil giant since the explosion and leak happened on April 20 stand at around $US102 billion, with the share price off 52%. BP shares in the US closed at $US27.02 on Friday, down 5.98%. BP said 37,000 people, 4,500 vessels and 100 aircraft were currently helping the response effort.

How to make unemployment worse: American senators, especially Republicans, have a death wish about them. They have been blocking a bill that will extend employment benefits for over a million of America’s unemployed, extend more health aid to cash-strapped US states and some tax breaks for business. That legislation failed for a third time in the Senate late last week, meaning the bill failed and the unemployed will go without any help once their benefits expire shortly. On Friday the jobless figures for June will be released. Over 100,000 temporary census workers will have lost their jobs, the optimists among analysts reckon more than 100,000 private jobs were created last month. They said that about May and were wrong.

Guinea votes: Rio Tinto was confident last week that it would have no trouble in Guinea, even though it has been threatened with having its latest (and smaller) mining lease at Simandou stripped from it. Guinea voted overnight in an election designed to take the country from military to civilian rule. Chinalco, its biggest shareholder, is partnering at Simandou, but bigger rival Vale of Brazil has a deal covering part of the project that Rio once controlled a few years ago, but had that stripped. According to Reuters, Guinea was recently named by watchdog Transparency International in its 2009 Corruption Perceptions index as ranking 168, jointly with Equatorial Guinea, Iran, Burundi and Haiti out of 180 countries listed. Sovereign risk, anyone?