The Drip, Drip, Drip of Recession
The Drip, Drip, Drip of Recession by David Haggith for The Great Recession
News of significant recessionary drops in the US became as relentless this past week as the ping, ping, pang of drips from a leaking ceiling hitting pans in the New York Stock Exchange. I’ve been saying you would hear the sounds of recession everywhere as soon as the second-quarter earnings reporting season began this summer. Here we are, and here’s a list of the week’s downbeat economic news that quickly terminated the S&P 500’s rally … right where I said it would end … slightly above its previous summit.
The Cass Freight Index remained negative for the seventh month in a row.
Shipping reflects the whole manufacturing economy, and it has been sinking into the South China Sea like this all year:
Bellwether Dow Transports continued to lead the Dow down.
Rail freight company CSX stocks plunged more than 11% late Tuesday and into Wednesday when its corporate report came out with earnings below expectations and with forward guidance for continued decline. CSX CEO, James Foote, said,
The present economic backdrop is one of the most puzzling I have experienced in my career…. Industrial customers’ volumes (are) continuing to show weakness with no concrete signs of these trends changing…. We are not necessarily being pessimistic about the second half of the year. But in as much as we need to adjust guidance, we’re just setting out the obvious.”
Two small-to-mid-size trucking companies joined four others that have gone out of business this year, probably not due entirely to shipping declines, but certainly not helped any by the suddenly tough freight world. For the past few years, trucking companies couldn’t find enough drivers or buy enough trucks. As recently as last year, manufacturing companies were having a hard time shipping their goods because they couldn’t find enough trucks or drivers. Now, however, trucking companies are suddenly laying off hundreds of drivers.
US manufacturing has been on the same down trend as the Dow Transports all year
US manufacturing moved back to hovering right on the line of contraction:
In fact, according to Chinese government television, the Federal Reserve has stated the US entered “a manufacturing recession” in the second quarter: