The Glub, Glub, Glub of Recession Circling the Drain
-- Published: Monday, 24 February 2020 | Print | Disqus
Who says there is no recession anywhere in sight? It depends on where you are looking. In short, manufacturingremainsin recession; corporate profitsremainin recession; freightremainsdeep in recession; Carmageddonremainsin recession; and the Retail Apocalypseremainsa recession for brick-and-mortar stores, while employment — the last holdout — is now also turning downward.
Themanufacturing recessionthat everyone acknowledges as having begun last summer continues:
This is the worst industrial production has been since Obama was in office. And this is before “coronavirus” became a household word. Of course, it could be worse still; we could be Germany.
It depends, of course, on who you go by. The ISM version of US manufacturing PMI from Moody’s Analytics has finally returned to the barely positive side of the recessionary line of demarcation:
US leading economic indicatorsappear to have put in a definite top with a worse-than-expected 0.3% MoM drop in the Conference Board’s index:
Another even broader measure of economic activity is doing worse.
Despite soaring stock prices, exuberant talking heads, and ebullient politicians (on the right),The Chicago Fed’s National Activity Index crashed from +0.41 to -0.35 in November (drastically worse than the +0.13 expectation). Twenty-seven indicators improved from November to December, while 56 indicators deteriorated and two were unchanged.
The head of the International Monetary Fund has warned that the global economy risks a return ofthe Great Depression,driven by inequality and financial sector instability…. “In some ways, this troubling trend is reminiscent of the early part of the 20th century – when the twin forces of technology and integration led to the first gilded age, the roaring 20s, and, ultimately, financial disaster….”
Eric LeCompte, the head of debt charity Jubilee USA, said: “The IMF delivered a stark message about the potential for another massive financial disaster that we last experienced during the Great Depression.
Most financial experts have been reluctant to see recession coming, and that is not surprising since almost none of them saw the greatest recession in nearly a hundred years coming until well after it was already here. So, typically, we’ve read things like “the risk of recession in the next two years is about 20%.” Now some are stepping up to the plate late in the game:
A respected U.S. central bank official and a team of economic strategists have warned that the nation is flirting with the brink of a recession. UBS Global Macro estimates a nearly one-in-three chance of a recession.
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