In the wake of huge plunge in wholesale inventories that still left the inventory-to-sales ratio in the stratosphere, the Atlanta Fed GDPNow Model plunged to +0.1%
Latest forecast: 0.1 percent — April 8, 2016
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 0.1 percent on April 8, down from 0.4 percent on April 5. After this morning’s wholesale trade report from the U.S. Bureau of the Census, the forecast for the contribution of inventory investment to first-quarter real GDP growth fell from –0.4 percentage points to –0.7 percentage points.
There’s momentum all right. And it’s hugely negative.
Today’s wholesale sales report added to the string of very poor economic reports. For my take, please see Wholesale Inventories Crash, Led by Autos.
Next week, retail sales and industrial production reports come out. If those reports are bad, GDP will head negative. At this point, even minor backward revisions can tip things negative.
If auto sales decline significantly or housing heads for the worse (both likely), recession it is, probably backdated to December 2015 or January 2016.
Mike “Mish” Shedlock
Has the market skyrocketed yet on the bad news?
ha ha right on, James. The fed won’t dare raise rates, instead we’ll have QE-forever.
Isn’t that wonderful? I’m still trying to get used to the new rules; that the stock market and the economy are no longer connected, at least not in parallel.
QE…QE…QE….
That’s how you call a goose you know.
And this Fed and it’s masters have their goose cooked….fully….stick a fork in them cause it’s over!
This is Donald Trump’s most shocking statement yet,
However the mainstream media isn’t saying a word about it!
What are they really trying to cover up?
http://tinyurl.com/recession-bubble-2016
The Federal Reserve only sets 3 interest rates and none of them matter a hoot in the US economy. The Federal Funds Rate (the most widely watched) only applied to interbank borrowing strictly for liquidity purposes and is virtually never even used as the banks are awash in vast excess money for which there is little demand for borrowing. The Federal Discount Rate applies only to directly borrowing from the Federal Reserve for liquidity purposes and is in fact practically never used. The third rate, IOER (Interest on Excess Reserves) applies to the amount of interest that member banks earn on their excess reserves deposited inside the Federal Reserve in their excess reserves accounts there. IOER was recently DOUBLED on December 16, 2015 from 0.25% to 0.50% and affects more than $2.5 trillion in excess reserves.
The Federal Reserve will continue increasing the only 3 interest rates that they set with more hikes this year as they move towards a more normal 3% on the Federal Funds Rate between now and the end of 2017, not that it matters a hoot to the US economy. The Federal Reserve is also SHRINKING their balance sheet and will continue to do so this year and next.
For me, the technical services sector in Voc Rehab and the VA went into recession about a year ago.
I predicted a recession in 2016 for Canada then US
Right on Canada.
May still be correct on US.
These things are always backdated with lots of revisions to boot.
Mish
The weekly MIsh recession prediction: a tradition since 2011
I’ve only been here since tail end of 2014 … but long enough to know you are wrong.
Come on Dave – grow a brain!
Exactly, David. If it’s backdated to December 2011, he’ll be right.
I have admitted on numerous occasions that I got an interim recession call wrong. I bought into analysis by the ECRI who also got it wrong.
No one is perfect. Unlike the ECRI which has had 3 bad calls and admitted only one of them, I admit mine. No one is perfect. I certainly am not.
But I am honest. The ECRI isn’t.
Mish
Definition or not we never really came out of the 2008 wipe out. Given how much the stats are diddled is not making it easy either.
Anybody arguing it’s good out there is nuts.
I have admitted on numerous occasions that I got an interim recession call wrong. I bought into analysis by the ECRI who also got it wrong.
No one is perfect. Unlike the ECRI which has had 3 bad calls and admitted only one of them, I admit mine. No one is perfect. I certainly am not.
But I am honest. The ECRI isn’t.
Mish
No one is perfect. And I do think you’re honest. I also think you are wrong on a fairly continuous basis. With all due respect, I copied your past remarks. No additional commentary is necessary.
8/29/11 US in Recession Right Here, Right Now
11/29/12 The ECRI is sticking with its “US is already in recession” call based on four coincident indicators. Very few agree, but for what it’s worth (perhaps nothing) I am one of those in agreement.
2/28/13
Biderman claims the recession started in 2013. I suggest the US has been in recession since last June or July
9/27/14 Weekly Unemployment Claims “Unexpectedly” Rise; Claims in Recession Pattern?
1/31/15 Canada in Recession, US Will Follow in 2015
2/26/15 Recession is On the Way: Questioning One’s Sanity; Beat the Crowd, Panic Now!
Isn’t the average revision to GDP numbers +- 1.3% eventually?
“There’s momentum all right. And it’s hugely negative.”
2008 redux
Back then on a different blog debating bullz that we were already in a recession. Got the “you don’t know s**t treatment” … and then september rolled around and almost to the person they scattered in the wind. With nary a “well, maybe you were right”.
I was right then
I’m right now.
Recession
Yep.
It’s not hard to filter/cleanse GDP & other macro indicators… remove the already-massive-and-still-increasing gov’t manipulation… William’s ShadowStats does a commendable job of this.
One could easily (and correctly) make the case that the US never pulled-out of the ’07-’08 recession in the first place. Practically every measure of “growth” or “recovery” since ’07 has proven to be an absolute fiction…
Jobs? part-time + diminishing income.
Finance? ZIRP policy speaks for itself.
Profit/production/value creation? automation, cost-cutting & continued (domestic) capacity shrinkage.
Credit & debt ratios? As bad/unsustainable as ever.
CapEx? Actually worse now than ’07-’08.
Recession has become the permanent “new normal”, and retrospective analysis will expose this fact in the not-too-distant future…
Just suspicious I guess, but every time I hear a stat released by a .gov bureaucracy, especially in an election year, I start turning over rocks looking for an ulterior motive or strategy.
Certainly the Fed has a dog in the fight,,,,or is aware of an underdog chomping at the bit to bring on an audit?
Considering it takes 18 months to two years for Fed monitary goosing to hit the streets, they are way behind the curve here. T minus 8 months and counting.
That said, the best indicator the Fed has lost control would be a loss in November of it’s favorite daughter? A “win” on the other hand, would reaffirm it’s omnipotence.
We sure as hell do live in interesting times!
I have a friend that sells cars in a fairly affluent suburb/county of Philly. Just last week he told me that business activity is extremely slow for both new and used for the dealership. Even the top salesmen had a bad month. He attributed it to the very mild winter pulling demand forward. Hopefully for him and everyone else it is just an outlier and not a forewarning.
Forewarning……..
No more outliers………..
March chain store sales. Should be an easy “beat” as Q1 2015 GDP only +0.6% and early Easter (in 2015 Easter in April), right? Think again. Thomson Reuters same store sales index year over year.
Expected +0.8%
Actual -0.1%
http://lipperalpha.financial.thomsonreuters.com/2016/04/difficult-march-comparisons-were-too-high-for-retailers-to-beat/
NIRP, “bring it on”!
That is totally off the table for the Federal Reserve and it is now shrinking its balance sheet.
US Federal Reserve to Trim Assets, Dump Mortgage Backed Securities
The US Federal Reserve is planning to reduce the size of its balance sheet by selling off mortgage-backed securities that it purchased to rescue the US economy during the 2008 financial crisis, Federal Reserve Chairwoman Janet Yellen said.
“At the present time, we hold a large quantity of mortgage-backed securities,” Yellen said on Thursday evening. “Eventually we would like to get back to an all [US] Treasury [securities] portfolio.”
http://sputniknews.com/us/20160408/1037670516/federal-reserve-trim-assets.html#ixzz45MOXBSKB
Certainly moving towards stall speed. March and April numbers should be interesting. Have to wonder if businesses are taking caution based on uncertainty in both Congress and the White House possibly changing parties and policies. Economy has always been slow in 8 year election cycles. 2008, 2000, 1992, 1984..when there is uncertainty in leadership stability.
http://www.advisorperspectives.com/dshort/updates/Chicago-Fed-National-Activity-Index.php
2014-2015 recession in Canada has not been officially called by economists yet has it? So far just journalists.
There is also this from zerohedge:
http://www.zerohedge.com/news/2016-04-08/albert-edwards-one-failsafe-indicator-inevitable-recession
The bottom line in that article as confirmed by many sources is that EARNINGS ARE FALLING SIGNIFICANTLY and earnings falls generally always predict slowdowns in the economy and falls in stock market prices if not outright recessions / depressions in economies.
mmmm
I’d go back into November 2015. The last quarter of 2015 was a hopeless retail mess; Auto sales were an obfuscated lie.
Many people are “over-inventorying” labor by believing that the stock averages are forecasting higher sales and demand around the corner. We are currently at the highest ratio of business inventories to final sales since October 2008 in part because low interest rates make it easy to stock more goods with little carrying cost.
When the markets finally break, we may again witness a hard landing driven by the dual liquidation of excess labor and stockpiled goods. The easy money policies and artificially low interest rates have moved demand forward and created a slew of economic activity that is unsustainable in what would be considered a normal economic environment. The article below looks at how this will result in a hard landing.
http://brucewilds.blogspot.com/2015/07/hard-landing-scenario-is-not-out-of.html
Once all of the tax refunds hit the street it will be spend, spend, SPEND!!!!!!!!!!!!