On Wednesday, the US stock market took its biggest drop of the year. Thursday, the Dow shed another 41 points.

Treasury yields – on 10-year notes – fell below 3%.

US financial stocks took their worst beating in 10 months.

Even gold gave up ground yesterday, with a $10 drop.

What spooked investors?

Maybe they’re catching on. There’s already a ‘double-dip’ in the housing sector. Now analysts are talking about a double-dip in the entire economy. They don’t know it, but the economy has probably already dipped. Properly adjusted for inflation, growth is negative. Further adjusted per capita, it is even worse.

The ISM manufacturing index dipped in May.

“Horror for US economy as data falls off cliff” says a CNBC headline.

CNBC seems to be hiring writers from the London tabloids. The story continues:

“It seems that almost every bit of data about the health of the US economy has disappointed expectations recently,” said Mark Riddell, in a note sent to CNBC on Wednesday.

“US house prices have fallen by more than 5 percent year on year, pending home sales have collapsed and existing home sales disappointed, the trend of improving jobless claims has arrested, first quarter GDP wasn’t revised upwards by the 0.4 percent forecast, durables goods orders shrank, manufacturing surveys from Philadelphia Fed, Richmond Fed and Chicago Fed were all very disappointing.

“And that’s just in the last week and a bit,” said Riddell.

“And right now, the economic data is suggesting that however measly you may think a 3 percent yield is on a 10-year Treasury, the yield should probably be a fair bit lower given what’s going on in the US economy,” said Riddell.

“You’ve also got to wonder at what point the markets for risky assets start noticing, too.”

“QE3 anybody?” asks Riddell.

Riddell is right. Almost all the news is bad. The press talks about a ‘soft patch’ for the recovery. But there is no recovery.

The latest jobs report puts the number of jobs created last month about 140,000 short of expectations. There were 177,000 new jobs created in April – barely enough to keep up with population growth. But in May the number of new jobs, according to ADP, dropped to 38,000.

And here’s the report from AP:

WASHINGTON (AP) – Hiring may be slowing after months of healthy job gains that helped drive economic growth.

The government’s May jobs report, to be released Friday, is expected to cement evidence that the economy has weakened in the face of high energy prices, scant pay raises and a depressed housing market. Analysts have been rushing to scale back their forecasts for job creation.

Persistent economic weakness could also imperil President Barack Obama’s prospects in the 2012 election. Pressure to focus on debt reduction was heightened Thursday by a warning from Moody’s Investors Service. The credit rating agency said it might downgrade the nation’s credit rating if the government failed to make progress in raising the debt limit in coming weeks. Republicans say they will agree to raise the limit only if Democrats back deep spending cuts.

Higher gas prices have left less money for consumers to spend on other purchases, like furniture, appliances and vacations. And average wages aren’t even keeping up with inflation. As a result, consumer spending, which fuels about 70 percent of the economy, is growing sluggishly.

In recent days, economists have sharply reduced their expectations for hiring in May. Nomura Securities now projects a gain of 85,000, down from 175,000 earlier this week. The consulting firm High Frequency Economics cut its estimate to only 50,000, from an earlier target of 200,000.

And don’t talk to us about housing!

Want to know what else sucks?

Associated Press adds a few things:

– The number of people applying for unemployment benefits remains stuck at a level that signals weak job growth.

– Factories received fewer orders for computers, autos, industrial machinery and other goods in April.

– Small businesses are hiring less. May marked a second month of weakness after solid gains in February and March.

And we’ll add some things of our own. Australia, for example. Its economy is shrinking at a 4% annualized rate. And car sales…especially sales of small cars – GM’s sales went down 1% in May, just when people should be preparing for their summer motoring vacations. And China. No one knows what is going on there, but we’re sure something sucks.

Always looking on the bright side, we ask: so where is the light at the end of this tunnel?

Answer: a long way off.

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.