Recession has Arrived; Factory Orders Decline 2.9%, Inventories Rise

By: Mike Shedlock | Thu, Feb 4, 2016
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Even though economists see a mere 20% chance of recession in 2016, I am increasingly confident a recession began in December 2015.

It was another disastrous factory orders report this month.

The Econoday Consensus Estimate was -2.8%, nearly on the mark in a range of -3.7% to +0.2%. It's mind-boggling that an economist would predict a rise. Are they throwing darts?


New Orders and Shipments

Factory Orders 2016-02-04


Core Capital Spending

Year-over-year core capital spending by manufacturers has been in negative territory for eleven months. Core capital spending is defined as nondefense capital goods, excluding aircraft.

Core Capital Goods 2016-01-04
Larger Image

The chart appears as if spending was positive last October, but that reading is -0.3%


Case for Recession Builds

  1. ISM Negative 4th Month, Employment Shows Significant Declines.
  2. Non-Manufacturing ISM Cracks Appear: 8 of 18 Industries in Contraction
  3. Portion of US Treasury Yield Curve Inverts.
  4. Like Lemmings Over a Cliff: Fed to Test Negative Interest Rates


Fantasyland Material

I repeat my claim Economists in Fantasyland: Economists See 20% Chance of Recession That's at Least 20% Likely Already Here.

With this disastrous report and a clear slowing of the service economy, a recession has arrived. Given NBER dating mechanisms, we may not know for another year!

 


 

Mike Shedlock

Author: Mike Shedlock

Mike Shedlock / Mish
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Mike Shedlock

Michael "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Visit http://www.sitkapacific.com/ to learn more about wealth management for investors seeking strong performance with low volatility.

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