U.S. Economy Appears To Be Headed For The Cliff

Dallas Fed Manufacturing Outlook for February plunged to -11.2 from -4.4 in January.  Wall Street Einsteins were expecting -2.8;  Philly Fed Survey fell to 5.2 vs. 8.2 expected but the 6-month outlook “index” plunged to 29.7 from 50.9 December; the Empire State Fed survey was weaker than January but the “new orders” index fell to 1.22 from 6.09 and future business expectations plunged from 48.3 to 25.58.  Everyone already knows that retail sales were negative in December (-.9) and January (-.8) – that’s with inflation – real retail sales (better measure of unit volume) were even more negative.

I wrote an article for Seeking Alpha in which I make the case that the U.S. economy is headed into a recession, if we’re not technically in one already.   You can read the article here:  The U.S. Economy May Be Headed For A Big Collapse.

This is an excellent graphic portrayal of the current situation in the U.S.  economy.  “U.S. Macro” is an index compiled by Bloomberg which measures the difference between the economic data as reported vs. the consensus estimates for that data (click to enlarge):

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By now I think almost everyone knows that the Fed has been pushing the stock market inexorably higher on a sea tide of printed money.  I think everyone understands that history has shown that market interventions always fail.  When the stock market intervention fails, it will trigger a collapse that will likely make the 1929 crash look tame…

3 thoughts on “U.S. Economy Appears To Be Headed For The Cliff

  1. Eleven trillion dollars: that’s how much of so-called Quantitative Easing the world’s central banks have done since the 2008 crisis. To put that in perspective, with eleven trillion dollars you could pay off pretty much all U.S. household debt – all mortgages, all car and student loans, credit cards – you name it.

    So what did the global economy get for $11,000,000,000,000 in QE?

    Following a post-recession pop, we got collapsing world trade growth, and that’s even with prices falling over the past three to four years.

    Why is this happening?

    It’s not because this time around things are different. To the contrary, the song remains the same.

    For a long time, nearly four decades, growth has been getting progressively weaker during each recovery from recession. Of course, the U.S. is a major contributor to world trade and QE, but its trend of weaker growth is present in all major developed economies.

    There are two key drivers behind this declining trend: demographics and lower productivity growth. Yes, it’s true that we’ve seen pretty good U.S. jobs growth recently, but that comes with productivity growth slamming down to zero.

    Japan, with its “lost decades,” is at the leading edge of this long-term trend. But make no mistake, Europe, and as we see, even the U.S., are not far behind. Knowing this, will a trillion or so of more QE from the ECB make the trends in these charts turn and go the other way?

    https://www.businesscycle.com/ecri-news-events/news-details/economic-cycle-research-ecri-the-song-remains-the-same-1

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