As someone who correctly predicted the Clinton recession I confidently say that the answer is yes. I can also say with equal confidence that the so-called boom-bust cycle is not an innate to market economies but is the product of the fractional banking system. However, this article is about the current direction of the US economy and the incompetence of the central bank. So what should we look out for?

Okay, let's go back to early 2002 when some economists (I think they were all Bush supporters) celebrated a Labor Department report which seemed to show that, unlike previous recessions, productivity had continued to rise, increasing at an annual rate of 5.2 per cent during the fourth quarter. I advised at the time that before anyone decided to pop any Champaign corks we should all take a closer look at a few facts.

The productivity figures were for the economy as a whole and therefore told us nothing about individual industries. A case in point was a McKinsey report released in 2001 that revealed that most of the improved productivity took place in six sectors: "retail, wholesale, securities, telecom, semiconductors, and computer manufacturing." The rest of the economy produced small productivity gains.

As I've said so many times before, the recession should at least have been dated from the time manufacturing began to contract, which some observers put at about June 2000. Unfortunately the 2.5 percent increase in productivity during the second quarter of 2001 blinded the great majority of commentators to the emerging signs of recession, as did the low level of unemployment.

That something was wrong should have been brought home to these commentators when the first quarter of 2001 recorded the sharpest decline in productivity in eight years and the first in five years. If they had have bothered to look they would have found that in the second quarter manufacturing productivity was falling at an annual rate of 3.6 percent and output by 5.1 percent. Moreover, an examination of input-output tables would have revealed that spending on intermediate goods had declined -- a clear sign that manufacturing was contracting.

The prognosis that these grim symptoms were signalling was reinforced by labour department figures showing that non-agricultural figures for the first quarter showed that labour unit costs were rising at an annual rate of 6.3 percent. Even the most blinkered of economic commentators should not have been able to avoid these warning signs, but avoid them they did, such is the tyranny of aggregates -- not to mention the herd instinct.

When an advanced economy slows down indivisible factors become underutilised which raises unit costs as output falls. Complementary factors will also be underutilised or rendered completely idle, which means unemployment in the case of labour. And the fact that labour is usually the last factor rendered idle also reduces productivity. However, once demand picks up again the indivisible factors will be increasingly utilised, along with labour, disproportionally increasing output and lowering unit costs.

Now the greater the excess capacity, meaning the degree of underutilisation, the more sensitive it's likely to be to an increase in demand. What this boils down to is that the cumulative effects of utilising more capacity must decline as more and more of that capacity comes into operation.

Therefore one of the results of bringing more of this capacity into production will be rising productivity. At which point the newspapers' highly paid economic gurus will announce that not only is the recession over but the rise in productivity is simply "astounding." The rise in productivity is neither astounding nor sustainable under present conditions.

It does, however, indicate that the Fed's regular policy of flooding the country with cheap credit eventually stimulated the economy. (I should emphasise at this point that cheap money policies do not always work). Hence this was not a productivity led recovery but cheap money one, which has laid down the foundations of another recession while aggravating the current account deficit. Nevertheless, the American economy has once again demonstrated an astonishing resilience, particularly in manufacturing. For this Americans can thank the President's 2003 cuts in capital gains taxes.

Therefore, when looking for signs of an impending recession keep a close eye on manufacturing conditions -- and particularly gross business spending. No matter what most economists and media pundits say, business spending is several times greater than consumer spending. It's all a question of arithmetic.

Note: I should add that none of the US economy's resilience owes anything to the Democrats and their media mates. Even though I have been an avid follower of the media since the 1950s I can still say the American media's reporting on the economy is the most disgraceful I have ever seen.

There is no doubt in my mind that the US media has deliberately lied to Americans regarding the true state of the economy. They have done this with malice of forethought: motivated by hate and political bigotry they deliberately betrayed the public's trust. Without a doubt these moral cripples are a real bunch of self-made ideologically driven bastards.