• 518 days Will The ECB Continue To Hike Rates?
  • 518 days Forbes: Aramco Remains Largest Company In The Middle East
  • 520 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 919 days Could Crypto Overtake Traditional Investment?
  • 924 days Americans Still Quitting Jobs At Record Pace
  • 926 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 929 days Is The Dollar Too Strong?
  • 930 days Big Tech Disappoints Investors on Earnings Calls
  • 930 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 932 days China Is Quietly Trying To Distance Itself From Russia
  • 932 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 936 days Crypto Investors Won Big In 2021
  • 937 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 937 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 940 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 940 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 943 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 944 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 944 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 946 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Markets
  3. Other

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

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.

  • December factory orders fell 2.9%
  • Durable goods orders -5.0%, nondurable goods -0.8%
  • November factory orders revised from -0.2% to -0.7%.
  • Core capital goods orders fell steep 4.3%
  • Inventories rose 0.2%
  • The inventory-to-sales ratio rose again which portends weakness for future hiring and production.
  • Shipments fell a steep 1.4%

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!

 

Back to homepage

Leave a comment

Leave a comment