Is the U.S. on the verge of economic collapse? If you listen to the talking heads on CNBC, the answer is a definite “no.” But how can they then explain the constant barrage of disappointing economic data?
That was the case again this morning with the release of the Empire Fed Manufacturing Index. The survey of manufacturing activity in New York State fell short of analysts’ expectations, representing the 10th miss in the past 12 months.
Digging into the report, the numbers only get worse. New orders tumbled. Prices Received slid. Shipments dropped. Inventories fell. Only 20% of respondents said business conditions had improved.
The last time the New York Manufacturing Index was this weak, the U.S. economy was entering the Great Recession.
Source: New York Federal Reserve
Employment conditions continue to worsen. The New York Fed reports, “Price changes were quite modest. The prices paid index slipped to 4.1, its lowest level since the Great Recession. The prices received index dipped below zero, falling six points to -5.2 in a sign that selling prices declined. Labor market conditions worsened, with declines in employment levels and hours worked. The index for number of employees fell below zero for the first time in well over two years, slipping eight points to -6.2, and the average workweek index dropped to -10.3.”
Worse still, businesses don’t see things turning around anytime soon. The index for future business conditions fell ten points to 23.2. Indices for expected new orders and shipments dropped to similar levels, and manufacturers expect prices for both goods purchased and received to decline.
Does this seem like an economy that can take a rate hike next week?