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

Finance Townhall ^ | February 5, 2016 | Mike Schedlock

[Kaslin]

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

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.

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!

[central_va]

Whose factories? USA’s or Asia’s? A layoff in China affect us how?

[CPT Clay]

yep

[IMR 4350]

A lot of the “found” money from oil and gas royalties is drying up.

[Gaffer]

Docks, warehouses, shipping and receiving employees, transporters, markup on goods going to support a host of US connections.

[Tupelo]

Horse Hockey!
There is no way on God’s earth, there ever will be a recession with a Black Democrat in the White House.

[pgyanke]

Could also be seasonal. When you look back at the first quarter of the last six years, it has always been rough territory for the economy. I think you will find that it is not a recession in its strictest terms but a continued lackluster expansion.

[DIRTYSECRET]

Guess that means I can go back into stocks in 6 months?

[txrefugee]

Lackluster though it was, our oil and gas industries kept the nation’s economy afloat during Obama’s disastrous terms. What growth there was, was based on energy exploration, recovery and transportation.
When these began to falter, with Obama dealing the fatal blow by boosting Iran’s oil company in his treasonous nuclear deal, there was no other part of the economy to take the place of the energy sector. Banks, real estate, manufacturing and transportation are all affected by the downturn in energy.It will get much worse before it gets better, hopefully with help from a new president at the helm of this sinking ship.

[wjcsux]

Watch the rail traffic. RR shipping is way down.

[central_va]

I cross RR tracks all the time in central va. I can’t remember the last train I saw. I used to see them all the time.

[ichabod1]

That’s another sign - slumping demand for transportation.

[ichabod1]

They’ll paper it over till he leaves. If they can. They will try. He was just out bragging about the 151K jobs created in January. Pitiful.

[IMR 4350]

With a big drop in oilfield trucking there will be a big drop in tires too.

Oilfield trucks go through a hell of a lot of tires.

[grumpygresh]

Demand is really weak. Despite low energy prices, ie lower overhead, transportation stocks are leading the way down.

[Randall_S]

If interested in a discussion about economic warfare and cybersecurity/cyberterrorism, be sure to listen to this interview with Kevin Freeman...
http://usatransnationalreport.org/2016/02/06/usa-transnational-report-february-6-2016-guest-kevin-d-freeman/

Interview with Kevin D. Freeman begins at 25:30 -

Kevin D. Freeman is a NY Times bestselling author and considered one of the world’s leading experts on the issues of Economic Warfare and Financial Terrorism. His research has been presented in critical DoD studies and he has been asked to brief or present to the FBI, DIA, ONA, SEC, Naval War College, HASC, Naval Postgraduate School, DARPA, IARPA, and a host of government agencies tasked with protecting America.

We discuss economic warfare, cyberattacks, Russia, China, Syrian hackers, market volatility, and yesterday’s announcement that the Chinese will be buying the Chicago Stock Exchange.

[HHFi]

Sorry, a recession is impossible. According to the press, Obama just “took a victory lap” to celebrate how great the economy is.

[citizen]

The January jobs created were primarily in fast food, restaurant, hotel - sservice jobs. Which = part-time jobs. Pitiful.

[kaehurowing]

665,000 more jobs lost, which Obama says is great news.

[TomasUSMC]

They have inflated the way they calculate the GDP first in 2013 by 3 percent and then this year by another .5 percent. So if it isn’t over 3.5 ITS NEGATIVE GDP. The last to quarters have been under 3.5 = RECESSION.