U.S. Economy Declining at Pace Not Seen Since 2008 Financial Crash

US Economy Declining at Pace Not Seen-Since 2008 Financial Crash
Facebook
Twitter
Telegram
Reddit
Email

The U.S. economy is rapidly declining at a pace that matches the 2008-09 financial crisis, according to the chief business economist at S&P Global Market Intelligence, Chris Williamson.

Williamson’s worrying observation cites the latest round of purchasing managers’ index (PMI) readings.

In July, the S&P Global U.S. Manufacturing PMI eased to a two-year low of 52.3, down from 52.7 in June—anything above 50 indicates growth.

The market had penciled in a reading of 52.

Since the beginning of July, production levels were flat, employment growth moderated, inflation stalled, and business sentiment plunged to its lowest level since October 2020.

More firms stated that they plan to slash personnel and cut costs.

Meanwhile, the S&P Global U.S. Composite PMI plunged to 47.5 in July, down from 52.3 a month ago.

The services PMI gave a reading of 47, down from 52.7 – falling short of the market estimate.

The decline – the largest since May 2020 – was driven by a decline in new exports, job creation, soaring prices, and low business confidence.

PMIs are essential indicators because they suggest where trends are heading in the manufacturing and service sectors.

“The U.S. economy is contracting at a rate not seen since the global financial crisis in 2009 (excluding the initial pandemic lockdown), as the flash #PMI covering the output of manufacturing and services fell sharply in July,” Williamson posted on Twitter.

Williamson also observed multiple forward-looking indicators, including the orders-inventory ratio signal, suggest that “worse is to come for U.S. manufacturing in August.”

READ MORE:  Disgraced FBI Official Peter Strzok: '9/11 Is NOTHING Compared To January 6'

“This means the #FOMC is hiking interest rates at a time when the U.S. economy is already showing severe signs of stress & recession risks have risen,” he stated.

This month, the Federal Open Market Committee (FOMC) will hold its two-day policy meeting. The market expects the Federal Reserve to raise interest rates by 75 basis points for a second consecutive month.

According to the CME FedWatch Tool, there is a 20 percent chance of a 100-basis-point hike this month amid soaring inflation.

But Market analysts fear that these efforts might facilitate a recession.

“As for next year, we strongly suspect rate cuts will be the key theme,” said ING economists.

“By delaying their response to high inflation and now having to move policy faster and deeper into restrictive territory, there is clearly the fear of a recession. At the same time, we think inflation could fall sharply from March next year onwards.”

Top economist Mohamed El-Erian told CNBC that inflation has likely peaked, but this may be at the economy’s expense.

“I think inflation has peaked in the U.S., at least for the next three to four months. We’ve got to see how sticky some elements are,” he said on Friday.

“But the problem is not that inflation is going to come down—that’s a really good thing. The problem is that inflation is going to come down with growth probably going into recession, and that’s not good news.”

Fears over the downturn of the U.S economy have been increasing

In addition to the 9.1 percent consumer price index (CPI) in June, metrics released this month indicate the economy is now slowing.

READ MORE:  Green MP Argues Using Dating App Grindr in Parliament Counts as 'Work'

While personal income remained unchanged at 0.5 percent increase, personal spending eased to a 0.2 percent increase month-over-month.

The Institute of Supply Management’s (ISM) Manufacturing PMI fell to 53, construction spending dropped 0.1 percent, industrial production dropped 0.2 percent, and manufacturing output decreased 0.5 percent.

Meanwhile, sentiments have deteriorated among companies and consumers.

As The Epoch Times noted:

The National Federation of Independent Business (NFIB) Optimism Index slipped to 89.5 (100 was sentiment in 1986), the IBD/TIPP Economic Optimism Index in the U.S. remained at an 11-year low, and the Conference Board’s Consumer Confidence Index tumbled to 98.7 (100 was sentiment in 1985).

There are also worrying signs in the labor market.

In the week ending July 16, the number of Americans filing new claims for jobless benefits grew to a nine-month high of 251,000, according to the Bureau of Labor Statistics (pdf),

So, is the U.S. in a Recession?

The focus will be on the second-quarter GDP report, which will determine whether the U.S is in a technical recession.

The market consensus is a growth rate of 0.4 percent, while the Bloomberg GDP estimates range from 55 economists between -0.6 percent and 1.2 percent.

The Atlanta Fed Bank’s GDPNow model estimate shows -1.6 percent in the April-to-June period.

The Fed’s tightening cycle will function on auto-pilot until there is a significant weakness in the labor market, says chief economist at Bank of the West Economics, Scott Anderson.

“It feels a bit like one of those bad horror movies where the creepy music is already playing, but the character continues to walk into the seemingly abandoned house,” he wrote in a note.

READ MORE:  Why The First Biological Male Winning 'Miss Greater Derry' Insults Women Everywhere

“You know this isn’t going to end well though you’re not yet sure what is about to happen.”

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments

Breaking

Trending

CNN's Primetime Viewership Plummets to Just 444,000 as Don Lemon Hits Record Low
CNN's Primetime Viewership Plummets to Just 444,000 as Don Lemon Hits Record Low
CNN’s average primetime viewership took a nose dive to only 444,000 viewers during the week of...
Former NFL Player Jessie Lemonier, 25, Dies Suddenly
Former NFL Player Jessie Lemonier, 25, Dies Suddenly
Former NFL defensive end Jessie Lemonier has died aged 25 years old, the Lions announced Thursday. “We...
Elizabeth Warren Accuses GOP of Creating 'Economic Chaos' to Help Trump Get Reelected
Elizabeth Warren Accuses GOP of Creating 'Economic Chaos' to Help Trump Get Reelected
Senator Elizabeth Warren has accused House Republicans of creating “economic chaos” to help...
Matt Gaetz: "They Had to Accuse Trump of Colluding with Russia Because He Was the Only One Who Wasn't"
Matt Gaetz: "They Had to Accuse Trump of Colluding with Russia Because He Was the Only One Who Wasn't"
Matt Gaetz joined Steve Bannon on the War Room to discuss the Deep State’s reaction to the unfolding...
GREAT RESET: EU Gives Green Light for Two Insect Species to Be used for Human Consumption
GREAT RESET: EU Gives Green Light for Two Insect Species to Be used for Human Consumption
The European Union has given the green light for an additional two insect species to be used for human...
Whoopi Goldberg Tries To Spin Biden's Classified Docs Scandal, Fails Spectacularly - WATCH
Whoopi Goldberg Tries To Spin Biden's Classified Docs Scandal, Fails Spectacularly - WATCH
“The View” host Whoopi Goldberg tried to spin Joe Biden’s classified documents scandal...
Lindsey Graham Laughs as Trump Says 'We Need a Leader to Stand Up to the RINOs' - WATCH
Lindsey Graham Laughs As Trump Says 'We Need a Leader to Stand Up to the RINOs' - WATCH
When Former President Donald Trump gave his moving speech in South Carolina on Saturday, one of his battle...
Paul Pelosi Attacker David DePape Makes Bizzare Call to TV Station: 'I've Got an Important Message...'
Paul Pelosi Attacker David DePape Makes Bizzare Call to TV Station: 'I've Got an Important Message...'
David DePape, the man who attacked Paul Pelosi in his home last year, made a bizarre call to a news station...
CRT Creator Makes $100k Per Speech Helping Teachers Push Toxic Theory in schools
CRT Creator Makes $100k Per Speech Helping Teachers Push Toxic Theory in schools
Professor Kimberlé Crenshaw, the divisive Critical Race Theory architect, is making massive financial...
Left-Leaning 'The Breakfast Club' Hosts Stunned as Callers Say "I'd Rather Have Trump" than Biden
Left-Leaning 'The Breakfast Club' Hosts Stunned as Callers Say "I'd Rather Have Trump" than Biden
Hosts of Charlamagne tha God’s left-leaning ‘The Breakfast Club’ were left stunned...
0
What are your thoughts? Click to commentx
()
x

JOIN THE FIGHT!

SIGN UP FOR OUR FREE BREAKING NEWSLETTER STRAIGHT TO YOUR INBOX! 

We don’t spam! Read our Privacy Policy for more info.