• 9 hours S&P 500 Officially In An Earnings Recession
  • 13 hours Miners Are Weathering The Trade War Storm
  • 16 hours UK Credit Card Interest Rates Are Skyrocketing
  • 1 day From Frenzy To Flop, The Death Of This Year’s Most Hyped IPO
  • 2 days Are Smart TVs Spying On Us?
  • 2 days Is Fossil Fuel Divestment A Waste Of Time?
  • 2 days A Russian Billionaire’s Space Quest To Save Humanity
  • 2 days Markets Take Breather As Consolidation Continues
  • 3 days Economic Woes Weigh On Copper Prices
  • 3 days World's Largest IPO At Risk Following Drone Strikes
  • 3 days Gold Is Beating Buffett’s Berkshire Hathaway
  • 3 days What’s Behind The Silver Sell-Off?
  • 4 days The Retail Apocalypse Is Accelerating
  • 4 days The Top Tech Stocks Of The Year
  • 4 days America’s Workforce Elderly Workforce To Double By 2028
  • 5 days Toyota Tests Solar-Powered Prius
  • 5 days Why The Gold Rally Flatlined
  • 6 days The Uranium Sector Can’t Catch A Break
  • 6 days Upcoming Fed Meeting Has Investors On Edge
  • 7 days Global Gold Sector Outlines Responsible Mining Principles
Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

  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