New York, NY, June 22, 2016 – Profit Confidential (www.ProfitConfidential.com), an e-letter published by Lombardi Publishing Corporation, a 30-year-old consumer publisher that has served over one million customers in 141 countries, is warning that three key economic indicators suggest the U.S. is heading into a recession.
“After seven years of growth, the U.S. economy appears to be heading toward a recession,” says economist and lead contributor Michael Lombardi. “In fact, three closely followed economic indicators suggest the country may already be in a recession.”
Lombardi explains that the first recession indicator is employment data. For May, the Bureau of Labor Statistics reported that the U.S. economy added just 38,000 jobs—the least amount of jobs created in a month in about six years. The employment figures from March and April were revised lower as well. (Source: “Employment Situation Summary,” U.S. Bureau of Labor Statistics web site, June 3, 2016; http://www.bls.gov/news.release/empsit.nr0.htm.)
“After years of quantitative easing and record-low interest rates, U.S. jobs growth should be robust. But it isn’t, and poor jobs growth is recessionary,” says Lombardi.
According to Lombardi, a second data point that suggests a recession is ahead is the manufacturing figures. Specifically, new orders at U.S. manufacturers; this is because new orders are a clear sign of current demand in the U.S. economy and new orders at manufacturers have been declining since 2014. (Source: “Value of Manufacturers’ New Orders for All Manufacturing Industries,” Federal Reserve Bank of St. Louis web site, June 16, 2016; https://research.stlouisfed.org/fred2/series/AMTMNO.)
“When new orders fall, it means demand in the economy is weakening, which is another recessionary sign,” says Lombardi.
“The last indicator is the Smoothed U.S. Recession Probabilities, which shows the probability of a recession in the U.S. The chart is at its highest level since June 2009, when the Great Recession was nearing its end,” Lombardi concludes. “On top of that, the Dow Jones Industrial Average has gone nowhere over the past 18 months; this seems like a repeat of 2007. The stock market spent 2015 putting in a huge top, and in putting in that top, the stock market, which is a leading economic indicator, is warning us of trouble ahead.”
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