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Key Sign That a U.S. Recession Has Begun

Written by Gary North on December 19, 2012

When Americans buy less from abroad for two consecutive months, something is up. What may not be up is the economy.

This has happened for the last two months for which data are available. The U.S. balance of payments is rising, as always, but at a lower rate.

The demand for foreign goods is slowing. This is one sign of a recession. If this continues for the next two months, it will be a clear recession indicator.

This has no direct connection with the fiscal cliff. There are constant stories about a deal being imminent, none of which pan out. But investors want to believe that a deal will postpone the day of reckoning. Of course, this will mean a larger deficit. Investors don’t care about the deficit. They care about rising taxes. I’m with them.

But taxes will rise. If they rise on the super-rich, this will reduce investment. It’s easier to spend money than take new risks that are going to be taxed more heavily.

The evidence from trade patterns is more reliable than rumors about avoiding the fiscal cliff.

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13 thoughts on “Key Sign That a U.S. Recession Has Begun

  1. 2WarAbnVet says:

    Second recession? When did the first one end? What we really need to brace for is the coming Obama depression.

    • There are some real fab sales going on, but I'm not buying, and from the looks of shoppers, they are buying small items,
      and not over spending, the normal stuff they buy at christmas time and replacing what needs to be replaced after 4 years
      of not buying anything. Gift giving this year are homemade goodies, not overpriced merchandise that will take months to pay off.

    • The first one ended when it became a depression. We're still in it. Don't you just love media and political spin?

    • Precisely. We still in the midst of the Recovery That Never Was.

  2. It's good for Americans to quit buying overseas; that means that the little money they're spending may be spent HERE, in the USA, where it should be! I've been øvømit-depressed since late November 6, 2012.

  3. The sad part of this long recession is that young people who never went through the good times i.e. the Reagan years, the early W years, etc., will think what we are in now is the norm. That will make the supposed government help type hope that Obama holds out that much more appealing. A key question is whether we already have gone past the "tipping point' or not ?

  4. It isn't just your children and grandchildren who will have to pay the horrific price of living in this society that they are trying to create. It will be far worse than that.

    If America goes down economically, it will go down militarily.
    If America goes down militarily, we all (remaining free countries) go down.

    The freewill is finished and it will be finished for a very, very long time.

    • you're forgetting that the country is NOT the government, and that the People (armed) are st ill the Militia. As long as we're armed, we don't need a paid military to protect us. Once the government collapses financially we can again rebuild a nation based on Liberty as was originally intended. Goodbye Administrative Bullcrap!!!
      And if China or anyone else comes looking for someone to collect from, I would suggest they start with all the government employees who ran up the balance of payments, created the debt, and destroyed the dollar. Taht would be evryone in Congress and the WH over the last 6 decades.

  5. "…a US recession has begun'!
    What recession? There is no 'recession'! Draw a bell curve. Label it 'whopping depression'. Put a mark where you choose on the ascending side. This…is where we are presently. We can 'whistle past the graveyard' as much as we want to but the mathematical certainty of the dollar destruction is inevitable…and 90% of the sheeple are totally unprepared.

  6. Well, EXCUSE ME for not buying any more Chinese crap!!! I believe more and more people are scrutinizing just where the products they're buying originate!! Looking more for the USA label. Could it be that others are doing it too???

  7. My husband bought boots from walmart andthey were made in China he wore them for a month and they fell apart he took them back and got another pair and the samething happened stop buying china made things they fall apart so fast We need to buy american made we no it is made good if it was made here except union made they are like china I will watch what I buy from now on

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