The Relentless Road to Recession
The Relentless Road to Recession by David Haggith for The Great Recession
“Show me the data,” demand those who cannot see a recession forming all around them and who keep parroting what they are told about the economy being strong because it is what they want to believe; yet, the data look like an endless march through a long summer down the road to recession.
And that is what you are going to get in this article, a seemingly endless parade of data along the recessionary road. This is for the data hounds.
As we end the summer of our discontent when few would deny that most economic talk turned toward recession and, as we begin the time when I said the stock market appears it may fulfill my prognostication of another October surprise, it’s time to lay out — again — the latest data that support my summer recession prediction. We’ll have to wait until next year for the government to officially declare a recession if one did start in September. (Yes, September is a summer month.) In the meantime, the data stream is a long line of confirmation.
I’ve been reminded that extraordinary claims (such as the recession declaration in my last article) require extraordinary proof, and I agree. After all, no one else is saying the recession has begun, though a small number of economists have said it might be happening now. For everyone’s benefit, but especially for those who refuse to give up their own unsupportable and, yet, undying belief that the “economy is strong,” here are the facts on parade.
Pardon the length of the article because I fully intend to overwhelm you with evidential support of my “extraordinary” claim in order to strip off the economic blinders by shear preponderance of evidence. After all, recessions are circumstantial, and circumstantial argument in court of law requires a preponderance of evidence. So, particularly for those who have said, “show me the money,” here is a barrage of data so obvious that I wonder how anyone has missed it all.
(I also know from experience that, if I only present a few major pieces of evidence, those who want to deny how truly bad our economy is will say I am just cherry-picking the data. On the contrary, while you can reasonably pick over various pieces of data below for how reliable any one piece is (as is usually the case in economics), the overall stream is broad and deep across all sectors of the US economy and has been for months! In fact, most of the data have gotten worse from one month to the next … with no sign of its downward march relenting.)
Manufacturing a recession
The biggest evidence that we began entering recession came from the IHS Markit’s Purchase Manager’s Index (PMI) which showed early in the summer that manufacturing had slid into recession. “Not to worry,” wrote almost everyone at the time. “Manufacturing is less than 20% of the US economy, while the services sector is holding strongly above recessionary levels. Plus consumer sentiment is strong, so it will carry us through this manufacturing slump.”