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Signs of a Recession Are Becoming Clearer

Written by Gary North on July 6, 2012

Two indicators of recent economic activity serve as early indicators: the pair of indexes know as the PMI (purchasing managers’ index). One is for manufacturing (13% of the economy), and the other for services (most of the economy). Both are published by the Institute of Supply Management. Both are giving bad vibrations.

The less significant sector is manufacturing, but it is a better indicator. It moved into negative territory in June: under 50. This was the first time this had happened since July 2009. Especially grim was the decline in new orders. The services index declined in every category, but has not fallen below 50. The supply managers are becoming pessimistic.

Another index that is taken seriously by forecasters is the Philadelphia Federal Reserve Bank’s survey. It showed lower numbers as well.

Its index of current activity dropped from an already negative 5.8 in May to a minus 16.6 in June, with nearly 40 percent of the firms in the survey reporting declines in activity compared to just 22 percent reporting increases. New orders and shipments in the Philadelphia region covered in the report fell 19 and 17 percent respectively, in just one month.

I have been warning about this for a month. I warned my subscribers on www.GaryNorth.com on June 6: “I think the USA will experience a recession, as defined by the National Bureau of Economic Research, beginning sometime before the next President is inaugurated.”

Keynesian economists were caught flat-footed by the ISM report on manufacturing.

Bloomberg surveyed 70 economists prior to the release of the ISM report, and not one of them got it right, with the average of their estimates predicting the ISM index to come in at 52. The actual number of 49.7 was a huge miss.

European manufacturing in the most recent quarter was the lowest in three years.

Auto and light truck sales in the United States are also in decline. Autos were the big growth sector in the first half of 2012.

Other bad signs:

• Consumer spending was revised downward in April to its lowest level in six months;

• Home prices appear to be poised for further declines;

• The commercial real estate market continues to languish;

• Corporate profits declined for the first time in four years, from $16.8 billion in the fourth quarter of last year to a minus $6.4 billion in the second quarter, the largest decline since the third quarter of 2008;

• Job growth is disappointing, having fallen sharply this spring, with expectations that Friday’s report will show job growth at 100,000, way less than needed just to absorb new workers entering the workforce.

The recovery has been the weakest in post-recession American history since World war II. It is about to end. It has already ended in Europe.

Continue Reading on thenewamerican.com

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14 thoughts on “Signs of a Recession Are Becoming Clearer

  1. sean murry says:

    i thought we were still in a recession.

  2. How can there be a START if a recession that hasn't ended since 2009.

  3. Charlie says:

    What I find ironic is that around here again, the house prices are starting to go back up a little, yet a very large percentage of people I know are still having at least some financial issues.

    I don't know…I never thought the recession really "ended," aside from little blips here and there, all they are are just that…little blips and glimmers of hope. I suppose those occur in all recessions, though.

    From where I sit the only real way to end the recession is to return to sound money, reduce regulation on production in this country and switch to either the Fair Tax or Herman Cain's 9-9-9 plan so we're competitive again.

  4. Most internet investment services have been predicting the exact fall, slim recovering, ballooning, crash for 18-24 months. None recognized a recovery since no standards have returned to pre-2008 levels. The crash we have just entered is predicted to be worse than the early 1900s depression. Water, food, transportation and of course, cash, are about to become non-existent or fightingly difficult to gain and hold on to. Our money is all transacted by plastic, and very easy to be cut off or taken over by the government.

  5. Obama and his cronies will try to spin the economy to look bettter then what it is but I don't see any silver lining or uptick in the near future with this amateur in the Oval Office.

  6. delmar jackson says:

    We gave out over 100,000 Green cards to foreign workers last month and EVERY month. I am tired of stories reporting on the number of jobs created, but never on the number that went to AMERICANS!

    why is USA importing Chinese to build our bridges? http://www.youtube.com/watch?v=83pNM3Oy1As

    Secret Video-Immigration Lawyers teach companies how to steal jobs from USA workers http://www.youtube.com/watch?v=TEwJvmJj2uo

    They Took Our Jobs – Immigration Stories You Are Not Supposed to Hear H-1B H-2B Visas http://www.youtube.com/watch?v=YItkuxv7dhU

    Young boy creates more jobs than Obama with his brilliant idea.

    Jon Stewart is THE MAN on lying to America about immigration!

    Millions of illegals will now get free healthcare. http://www.youtube.com/watch?v=U9Banza7Y0A

  7. Topboom says:

    This just in from the OBAMA ADMINISTRATION; It is confirmed that we have just entered the great recession of 2012, the second great recession in a row, following the great recession of 2009, which still continues to today. We have also confirmed the causes of the 2009 and 2012 recessions……ITS BUSH'S FAULT!!!!!

    I expect to be seeing this OBAMA press release any day now on MSNBC, CNN, CBS, ABC, & NBC

  8. Groundzero says:

    If u call the FED's buying our bonds (with taxpayer$) as a recovery. The recession DEEPENS. do u get it or do u have more false numbers to show us people feeling it?

  9. Groundzero says:

    STARTING to SINK LOWER. U can't HIDE the FACTS in Numbers.

  10. No doubt a couple of years from now when american people suffer even more because of the poor decisions Obama has made so far, it will still be Bush's fault. Thank goodness Obama has very little chance of being reelected.

  11. P wauford says:

    The only way to get our country and We the People back to prosperity is to get ourselves, our family, our friends and families, their friends and families ,etc. to get out and vote Republicans into office at the local, state, and Federal level in the House of Representives, the Senate, the Governers, and most importantly, The Presidency. WORD OF MOUTH is the most powerful form of advertising and persuation. Talk with everybody, drive them to the voting places, vote absentee if necessary. We can't sit around and do nothing but complain. Get out-get Busy.

  12. […] In addition to these numbers, it appears we are headed towards a deeper recession. Dr. Gary North points out: […]

  13. redpens says:

    We never really left the recession

  14. Texas Chris says:

    If you drop a dead cat from high enough it'll bounce a bit as well. Doesn't mean the cat's alive…