Wednesday, January 9, 2008

Eight Reasons Why the Economy is Headed for a Recession
If you’re watching the economic indicators carefully, you can find more than enough proof to forecast a recession this year.
Here are just a few top indicators that I see…
1. Pending, New and Existing Home Sales all continue to miss their estimates. So the housing market isn’t recovering.
2. Many sectors of the stock market are already hitting 52-week lows.
3. Fed’s Plosser and Lockhart and now Rosengren all stated that the economy is getting worse. They also said the Fed may have to cut rates once again this year. Obviously, the Fed’s men wouldn’t even mention cutting rates, if they saw good times ahead for the U.S. economy. These are the guys that get somewhat real time data from all over the United States.
4. Last month, employment dropped significantly. Only 18,000 people were hired nationwide – out of a population of 300 million people.
5. Unemployment edged higher from 4.7% to 5%. This will continue to move higher.
6. Manufacturing in America is in a contraction phase as shown by the ISM manufacturing numbers. The ISM number was much lower than expected at 47.7. A number below 50 is considered in the “bust” category. It means the demand from our manufacturing sector is shrinking.
7. Consumer Confidence continues to fall. The latest reading was 87.3 vs. the expected 91.5. So the consumer continues to lose confidence in the economy for good reason.
8. Durable Goods missed their expected number as well.

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