{"id":1100696,"date":"2019-02-15T17:00:11","date_gmt":"2019-02-15T17:00:11","guid":{"rendered":"https:\/\/dailyreckoning.com\/?p=106750"},"modified":"2019-02-15T17:00:11","modified_gmt":"2019-02-15T17:00:11","slug":"more-evidence-of-coming-recession","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1100696","title":{"rendered":"More Evidence of Coming Recession"},"content":{"rendered":"

This post More Evidence of Coming Recession<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

The stock market took a wobble yesterday.<\/p>\n

The Dow Jones slipped 104 points, the S&P seven.<\/p>\n

The Nasdaq worked a slight gain… but the bears won the day\u2019s combat by majority decision.<\/p>\n

The averages roared back today. But what accounts for yesterday\u2019s loss?<\/p>\n

The American consumer evidently caught a flu last quarter.<\/p>\n

November\u2013December retail sales suffered the largest monthly drop since September 2009.<\/p>\n

Reuters:<\/p>\n

\n

U.S. retail sales recorded their biggest drop in more than nine years in December as receipts fell across the board, suggesting a sharp slowdown in economic activity at the end of 2018. The shockingly weak report from the Commerce Department on Thursday led to growth estimates for the fourth-quarter being cut to below a 2.0% annualized rate.\u00a0<\/em><\/p>\n<\/blockquote>\n

Dismal retail numbers suggest fourth-quarter GDP will vastly disappoint expectations.<\/p>\n

(Q4 GDP was originally scheduled for Jan. 30 release. The government \u201cshutdown\u201d has delayed it.)<\/p>\n

The crystal gazers immediately slashed their Q4 growth estimates.<\/p>\n

Barclays had pegged Q4 growth at 2.8%. But after yesterday\u2019s report\u2026 2.1%.<\/p>\n

JPMorgan\u2019s previous forecast was 2.6%. It is now 2.0%.<\/p>\n

Goldman likewise revised its forecast to 2.0%.<\/p>\n

Even the Federal Reserve\u2019s Atlanta outpost \u2014 notorious for its comically optimistic GDP projections \u2014 hacksawed its previous estimate nearly in half.<\/p>\n

From 2.7% on Feb. 6\u2026 it now envisions Q4 GDP growth of 1.5%.<\/p>\n

But what about internet retailers? Is not the internet displacing the brick-and-mortar shop? Maybe they took up the slack.<\/p>\n

Alas\u2026 they did not.<\/p>\n

Internet sales dropped 3.9% \u2014 their largest swoon since November 2008.<\/p>\n

\u201cTruly a surprise\u201d is how National Retail Federation (NRF) chief economist Jack Kleinhenz described the results \u2014 \u201cin contradiction to the consumer spending trends\u201d in previous operation.<\/p>\n

To what foul causes do we attribute the latest retail slippage?<\/p>\n

NRF president and CEO Matt Shay:<\/p>\n

\n

It appears that worries over the trade war and turmoil in the stock markets impacted consumer behavior more than we expected. There’s also a question of whether the government shutdown and resulting delay in collecting data might have made the results less reliable.<\/em><\/p>\n<\/blockquote>\n

Just so.<\/p>\n

But could the weak numbers simply indicate recession?<\/p>\n

Recessions only become visible post factum<\/em>.<\/p>\n

Like a man halfway into a minefield alerted to his situation only after an explosion astern\u2026 recessions begin six to 12 months (or more) before economists can identify them.<\/p>\n

One omen of looming recession is slackening industrial production.<\/p>\n

We are informed this morning that United States industrial production sank 0.6% last month \u2014 the first drop in eight months.<\/p>\n

Analysts had forecast a 0.1% gain.<\/p>\n

Meantime, December industrial production was downgraded 0.2% from initial estimates.<\/p>\n

Trade war, an overall global slowdown and a hefty dollar are the explanations in general circulation.<\/p>\n

Is weakening industrial production another straw in the wind, a foreshadow of recession?<\/p>\n

Diane Swonk, chief economist at Grant Thornton LLP:<\/p>\n

\n

The 0.6% drop in industrial production in January was as disturbing as the drop in retail sales in that it was so broad based.\u00a0<\/em><\/p>\n<\/blockquote>\n

Meantime, the unemployment rate sank to a 3.7% low in September. It has been on the creep ever since, like a thief on tiptoe.<\/p>\n

January\u2019s reading came in at 4%.<\/p>\n

As we explained<\/strong><\/a> this week, data from the National Bureau of Economic Research indicates recession is often on tap nine months after unemployment bottoms.<\/p>\n

But our discussion would be incomplete without mention of the Federal Reserve…<\/p>\n

It has already backed off its rate hikes. The most recent retail sales data will likely keep it on ice.<\/p>\n

Explains Citigroup economist Andrew Hollenhorst:<\/p>\n

\n

Until [yesterday] morning, Fed official hesitance to hike further was based on risks emanating from global growth and from financial markets, despite a strong domestic outlook. The decline in retail sales calls into question the domestic growth assumption.<\/em><\/p>\n<\/blockquote>\n

But will the Federal Reserve soon return to cutting rates?<\/p>\n

The futures market says its next move will likely be a rate cut \u2014 not a hike.<\/p>\n

But as we also explained recently, watch out for the next rate cut.<\/p>\n

The past three recessions struck within three months of the rate cut that ended a hike cycle.<\/p>\n

For reasons we need not look far\u2026<\/p>\n

Monetary policy runs to a lagging schedule of perhaps 12\u201318 months.<\/p>\n

The impact of previous tightening is not immediate. Once the economy absorbs its full effects, the numbers give off their alarms.<\/p>\n

The monetary authority then decides it must cut rates once again.<\/p>\n

But it is too late.<\/p>\n

Recession has already been \u201cbaked into the cake.\u201d And the cake is contracting.<\/p>\n

We expect the pattern to hold.<\/p>\n

You can therefore expect recession within three months of the next rate hike.<\/p>\n

We could be wrong, of course. But we could also be right\u2026<\/p>\n

Below, Jim Rickards shows you why multiple risks are converging on the economy at once. Does the U.S. face a \u201clost decade\u201d? Read on.<\/p>\n

Regards,<\/p>\n

Brian Maher
\nManaging editor, The Daily Reckoning<\/em><\/p>\n

The post More Evidence of Coming Recession<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

This post More Evidence of Coming Recession<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

Major banks downgrade growth estimates following dismal retail sales… U.S. industrial production falls to eight-month lows…<\/p>\n

The post More Evidence of Coming Recession<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"author":16,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[484,366,719,463],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1100696"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1100696"}],"version-history":[{"count":1,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1100696\/revisions"}],"predecessor-version":[{"id":1100697,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1100696\/revisions\/1100697"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1100696"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1100696"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1100696"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}