-- Profit Confidential (www.ProfitConfidential.com) an e-letter of Lombardi Publishing Corporation, a 30-year-old consumer publisher that has served over one million customers in 141 countries, says three key indicators suggest the U.S. is already in a recession.
“While the U.S. economy has been downgraded for 2016 and 2017, few economists are willing to call for a U.S. recession,” says economist and lead contributor Michael Lombardi. “But it looks like the U.S. is already in a recession according to three key economic indicators.”
Lombardi explains that the Institute of Supply Management’s Manufacturing Purchasing Managers’ Index (PMI) has been below 50 since October of 2015. Any reading on the PMI below 50 suggests a contraction in the U.S. manufacturing sector. The last time the PMI declined for four or more consecutive months, the U.S. was in the midst of the Great Recession. (Source: “ISM Manufacturing: PMI Composite Index,” Federal Reserve Bank of St. Louis, March 1, 2016; https://research.stlouisfed.org/fred2/series/NAPM.)
“The Markit Flash U.S. Services PMI is an indicator of the health of the services sector in the U.S. economy. In February, this indicator declined for the first time since October of 2013, registering at 49.8 in February, down from 53.2 in January,” Lombardi adds. “This represents the weakest U.S. service sector performance in 28 months.” (Source: “Markit Flash U.S. Services PMI,” Markit Economics, February 14, 2016; https://www.markiteconomics.com/Survey/PressRelease.mvc/b4812aba6c884adb8e186062f3632267.)
In addition to all that, consumer spending is down significantly. The Total Business: Inventories to Sales Ratio currently stands at 1.38, up sharply from 1.25 in 2012. When the ratio rises, it means businesses are increasing their stockpile of goods because consumers are buying less. It now stands at its highest level since the Great Recession. (Source: “Total Business: Inventories to Sales Ratio,” Federal Reserve Bank of St. Louis, February 12, 2016; https://research.stlouisfed.org/fred2/series/ISRATIO.)
“No matter what you hear on Wall Street or from Capitol Hill, the U.S. economy isn’t doing well. The primary reason why U.S. stocks performed well over the last number of years is due to the Federal Reserve and its easy money policy,” Lombardi explains. “The economic data now streaming out of the U.S. is showing a completely different picture. Stocks will tumble further when additional data comes in showing the U.S. is in a recession.”
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. More information on Lombardi Publishing Corporation can be found at www.LombardiPublishing.com.
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