The national income accounts show that recession isn't the only domestic concern, perhaps not even the biggest. Total corporate profits in the first quarter of 2008 were not much higher, in absolute terms, than in the first quarter of 2007.

This is not the result of higher labor costs. In fact, consumer spending power, and therefore consumer spending, showed no net rise in March and April. Moreover, the "core" inflation rate at the wholesale level ("Core" PPI, which excludes food and energy) rose by 0.4 percent, while the "core" retail inflation rate (CPI) rose by 0.1 percent. These data suggest that profit margins are still being squeezed by the slow growth in volume and no price relief. That probably means investing and hiring are still being trimmed. Finally, this means the chance for the economy to rebound this summer is between slim and none.

That's true even if the price of a barrel falls to $110. The big problem is that instead of dropping that much, from current levels, it might increase that much. And no one can be certain which direction prices may take. As if that wasn't enough, recent announcements suggest that the price of energy not only remains very high but is starting to filter through to prices of chemicals and plastics. And that means inflation is heading higher. This is one of the two big concerns of consumers. With hiring prospects limited and now more signs that prices will continue to go up, consumer spending is unlikely to be picking up soon.

One of the implications of sustained inflationary pressure is the impact on asset values going forward. Bond yields generally reflect a view that inflation is tame and probably will be tamer, the longer the domestic economy remains soft. More globally, the IMF is now projecting a 3.8 percent rise in GDP in 2009, not much different from the 3.7 percent projection for this year.

Yet food and energy prices are rising and now there is some indication that higher petrochemical prices are feeding through to higher prices for chemicals and plastics. The suggestion, then, is that bond yields may be inching up this summer. Does this imply stock prices could be inching down? The BBC Global 30 index rallied a little in May but gave up most of these gains by the end of the month. That could be a pattern for the rest of the summer. Or perhaps stock markets could turn more uniformly bearish. In short, economic news could be poised to turn a little more negative this summer.