Is This the Beginning of the Next Recession?

[marmar]

Is This the Beginning of the Next Recession?
by Wolf Richter • February 24, 2016


[font color="blue"]“Significant risk” of “falling into contraction” with “worse to come.”[/font]

The US economy is largely service based. So when the “manufacturing renaissance” and “on-shoring” that everyone had been waiting for turned into no-shows, and when instead manufacturing started slowing in early 2015, it was no big deal, according to the meme.

OK, it was terrible for the folks who lost their jobs. But manufacturing accounts for only 12% of the US economy and employs only about 9% of the workforce. So overall, it’s not the end of the world, we heard constantly. And besides, we could always make it up with fast food.

Manufacturing alone can’t drag the US into a recession, we were assured. And the service economy would continue to be strong. That was the meme.

Then, a few days ago, Evan Koenig, Senior Vice President at the Dallas Fed, gave a presentation that showed that manufacturing contractions preceded service contractions in the run-up of the past two recessions. When service sector growth begins to dwindle – so still growth, but slower growth – after the manufacturing sector has already begun to shrink, that’s the point he called “prelude to recession.” And when the service sector begins to actually shrink, that event marks what will later be official called the beginning of the recession [read… “Prelude to Recession”: the Dallas Fed’s Unsettling Charts].

That “prelude to a recession” happened a few months ago. At the time, manufacturing was already shrinking; and the services index had just started heading south. But now the services index entered a contraction as well. So this could mark the beginning of what will much later be officially called a recession. ................(more)

http://wolfstreet.com/2016/02/24/is-this-the-beginning-of-the-next-recession/

[Skittles]

1. the economy absolutely stinks

any thinking person knows that to be true

[busterbrown]

2. People need to understand..

that this is carryover from the last recession.
That recession was caused by the destruction of the middle class..

jobs being shipped overseas..Deregulations of Wall street and Housing Mortgage Companies running amuck..

I’m in the retail business in Burbank and I see businesses closing every couple of months. Many of these were small retail businesses which just could not survive the malaise of the middle class...

I blame all of it on Republicans.. Concentrating on numbers (debt, deficits etc) rather than helping Obama establish millions of good paying jobs fixing the crumbling infrastructure.. Yep they destroyed our middle class
rather than help Obama Fix the Economy..

[area51]

3. +1 n/t

[Skittles]

4. sorry

yes, Obama was handed a country in crisis, but do NOT tell me he could not have done better; that is UTTER NONSENSE.

[busterbrown]

5. Well..Please tell me how he could have done it..

I understand for awhile that we had majorities in both chambers, however? We had some freaking pieces of crap dems.who frequently sided with Republicans in our attempts to pass solid stimulus packages.

Now that I have said this.. Please explain your “utter nonsense” comment.

[Skittles]

7. Obama was not blameless in Dems losing the majorities either

ENOUGH with the excuses already

[bigwillq]

6. What Skittles said.