Remember the talk of a recession?
A few weeks ago, the White House et al. assured us that two consecutive quarters of negative GDP growth was the old-school way of measuring the economy. No recession, they assured us. Trust us because we know and you don't, or something like that.
Well, let's see how they explain this economic story. This is from CNN Business:
Business activity at private US companies in early August dropped off at some of the sharpest rates seen since the beginning of the pandemic as rising interest rates and high inflation crimped consumer spending, according to data released Tuesday.
The latest S&P Global preliminary flash composite purchasing managers index, or PMI, registered a level of 45 as of August 22, down from 47.7 in July.
The rate at which business activity slowed was the fastest recorded since May 2020 when the pandemic shutdowns first took hold, according to S&P Global. This marks five consecutive months that the activity index has fallen and the second consecutive month that it has been in contraction territory. Levels above 50 indicate expansion, while levels below represent a contraction is occurring, according to S&P Global.
Maybe the White House will call it "the monkeypox recession" and tell Americans to put on a mask when they are driving their electric cars.
Another report appeared today. Frankly, it was not shocking, because I see that "for sale" signs are not going down as quickly as they did months ago. This is about home sales today:
Only 511,000 new homes were sold last month, at a seasonally adjusted annualized rate, down from a revised 585,000 in June. That's the lowest sales number since January 2016. A year ago, 726,000 newly constructed homes were sold.
Again, I did not need a report to confirm that slowdown. I remember "for sale" signs up on Monday and gone the next day. We've had two signs up around here, and they've been up for a couple of weeks.
The recession talk gets louder when we see this in the news:
Best Buy, Ford Motor, HBO Max, Peloton, Shopify, Re/Max, Walmart and Wayfair are among the firms that announced layoffs in recent weeks. Meanwhile, 50% of firms are anticipating a reduction in overall headcount, while 52% foresee instituting a hiring freeze and 44% rescinding job offers, according to a PwC survey of 722 U.S. executives fielded in early August.
So let's get this straight: layoffs, drop in home sales, and business activity is down. It looks like a recession to me. I'm sure that the White House press secretary will put some spin on this reality later.
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