Lombardi Financial Warns U.S. Economy Could Enter a Recession in 2016

Lombardi Publishing warns that current major indicators imply a recession in the U.S. between late 2015 and early 2016.

Lombardi Publishing Corporation (www.LombardiPublishing.com), a 29-year-old consumer publisher that has served over one million customers in 141 countries, is warning that major economic indicators suggest the U.S. could enter a recession in late 2015 or early 2016.

While the mainstream media and economists are convinced there’s prosperity in America, Michael Lombardi, economist and lead contributor, is concerned the U.S. economy will enter a recession in late 2015 or early 2016. “The simple fact is that consumer spending, the biggest factor driving the U.S. economy, is presently experiencing its own recession. Wholesale sales in the U.S. are plummeting while inventories are rising very quickly; that’s not a good sign.”

In January, wholesale sales in the U.S. declined 3.1% from the previous month and one percent year-over-year. Meanwhile, inventories increased by 0.3% from December and 6.2% from last January. (Source: “Monthly Wholesale Trade: Sales and Inventories January 2015,” U.S. Census Bureau web site, March 10, 2015; http://www.census.gov/wholesale/pdf/mwts/currentwhl.pdf.)

Lombardi explains that it’s also important to follow the inventory/sales ratio at wholesalers; this number provides an idea about inventory buildup relative to sales. When economic conditions are poor, the ratio rises as companies stockpile goods they can’t sell. In January of 2015, the inventory/sales ratio stood at 1.27, the highest this ratio has been at wholesalers since 2009, when the U.S. economy was still in a recession. (Source: Ibid.)

Other economic data are also disconcerting. While 295,000 new jobs were added in February and the unemployment rate fell to 5.5%, 30% of all jobs created in the month were in low-wage paying sectors like retail trade and food services, says Lombardi. This trend has been going on for quite some time. (Source: “The Employment Situation – February 2015,” U.S. Bureau of Labor Statistics web site, March 6, 2015; http://www.bls.gov/news.release/empsit.nr0.htm.)

“Incomes also remain stagnant. In all of 2014, average hourly wages in the private sector increased by just $0.53 an hour. This translates to $21.20 more per week based on a 40-hour workweek, though the 40-hour workweek is becoming extinct as part-time work prevails,” Lombardi adds. “Since we came out of the last recession, hourly wages have barely increased.” (Source: “Average Hourly Earnings of All Employees: Total Private,” Federal Reserve Bank of St. Louis web site; http://research.stlouisfed.org/fred2/series/CES0500000003, last accessed March 20, 2015.)

Consumption is also a growing concern, says Lombardi. “Consumer spending accounts for two-thirds of the U.S. gross domestic product and in times of U.S. economic growth, one would expect to see consumer spending increase. However, this isn’t happening.” In 2014, personal consumption expenditure per capita on durable goods (money spent on goods expected to last longer, like appliances and TVs) grew by 3.5% year-over-year, the slowest pace of durable goods growth since the end of the last recession. (Source: “Personal consumption expenditures per capita: Goods: Durable goods,” Federal Reserve Bank of St. Louis web site; http://research.stlouisfed.org/fred2/series/A795RC0Q052SBEA, last accessed March 9, 2015.)

“Weak consumer spending numbers aren’t a total surprise when you consider consumer confidence levels are depressed. If consumers feel good about their jobs, their incomes, and their savings, they are more apt to spend. Unfortunately, 92% of Americans still believe that the jobs market has only partially or hardly recovered,” Lombardi concludes. “Wall Street might be telling us the U.S. economy is on solid ground, but they were saying the same things in 2007, just before we entered the Great Recession.” (Source: “Most Say Government Policies Since Recession Have Done Little to Help Middle Class, Poor,” Pew Research Center web site, March 4, 2015; http://www.people-press.org/files/2015/03/03-04-15-Economy-release.pdf.)

Founded in 1986, Lombardi Publishing Corporation, which has served over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more information on Lombardi Publishing Corporation, visit www.LombardiPublishing.com.

Contact Info:
Name: Wendy Potter
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Organization: Lombardi Publishing Corporation
Address: 350 5th Avenue, 59th Floor, New York, NY 10118
Phone: 905 856 2022
Website: http://lombardipublishing.com/

Release ID: 77856