Bleak economic reports signal recession
Mark FelsenthalReutersSaturday February 16, 2008
A series of bleak economic reports on Friday showed the mood of American consumers deteriorating in February to a point that has always signaled recession, while factory activity in New York state suffered its biggest drop on record.
Compounding worries about a downturn, data suggested bubbling price pressures, raising the possibility of a troublesome scenario of simultaneously slowing growth and rising inflation -- "stagflation."
"This is just horrible. The sustained volatility in the markets, the rise in energy and food prices and, of course, the catastrophe in the housing market is making consumers extraordinarily miserable," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York.
The Reuters/University of Michigan Surveys of Consumers index of consumer sentiment dropped to 69.6 -- well below analysts' median forecast for a preliminary reading of 76.3 -- from 78.4 at the end of January. The February reading was the lowest since February 1992.
"The sentiment index has only been this low during the recessions of the mid 1970s, the early 1980s and the early 1990s," survey director Richard Curtin said in a statement.
A separate Federal Reserve survey showed industrial production inched up 0.1 percent in January but factory activity was unchanged.
Financial markets, however, took their cue from a gauge of February factory activity in New York state, which posted its biggest drop on record to nearly a five-year low.
"It's another recession-type reading. New orders came unglued here. There's further downward pressure on production coming," said Keith Hembre, chief economist at FAF Advisors in Minneapolis.
Mark FelsenthalReutersSaturday February 16, 2008
A series of bleak economic reports on Friday showed the mood of American consumers deteriorating in February to a point that has always signaled recession, while factory activity in New York state suffered its biggest drop on record.
Compounding worries about a downturn, data suggested bubbling price pressures, raising the possibility of a troublesome scenario of simultaneously slowing growth and rising inflation -- "stagflation."
"This is just horrible. The sustained volatility in the markets, the rise in energy and food prices and, of course, the catastrophe in the housing market is making consumers extraordinarily miserable," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York.
The Reuters/University of Michigan Surveys of Consumers index of consumer sentiment dropped to 69.6 -- well below analysts' median forecast for a preliminary reading of 76.3 -- from 78.4 at the end of January. The February reading was the lowest since February 1992.
"The sentiment index has only been this low during the recessions of the mid 1970s, the early 1980s and the early 1990s," survey director Richard Curtin said in a statement.
A separate Federal Reserve survey showed industrial production inched up 0.1 percent in January but factory activity was unchanged.
Financial markets, however, took their cue from a gauge of February factory activity in New York state, which posted its biggest drop on record to nearly a five-year low.
"It's another recession-type reading. New orders came unglued here. There's further downward pressure on production coming," said Keith Hembre, chief economist at FAF Advisors in Minneapolis.
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