The U.S. (and Global) Economy Is In Trouble

July 13, 2019 by IWB by Dave Kranzler of Investment Research Dynamics

If the Fed does cut rates at the July FOMC meeting, it’s because Powell and his cohorts are well aware of the deteriorating economic conditions which are driving the data embedded in these charts which show that US corporate “sentiment” toward the economy and business conditions is in a free-fall:

The chart on the left is Morgan Stanley’s Business Conditions index. The index is designed to capture turning points in the economy. It fell to 13 in June from 45 in May. It was the largest one-month decline in the history of the index. It’s also the lowest reading on the index since December 2008.

The chart on the right shows business/manufacturing executives’ business expectations (blue line) vs consumer expectations. Businesses have become quite negative in their outlook for economic conditions. You’ll note the spread between business and consumer expectations (business minus consumer) is the widest and most negative since the tech stock bubble popped in 2000.

The U.S. and global economies are spiraling into a deep recession.  Aside from the progression of the business cycle, which has been hindered from its natural completion since 2008 by money printing and ZIRP from Central Banks, the world is awash in too much debt, especially at the household level. The Central Banks can stimulate consumption if they want to subsidize negative interest rates for credit card companies.  But short of that, the economy is in big trouble.

Worldwide economic downturn

Worldwide economic recession

Worldwide economic depression

Government debt defaults

Company closings

Stock market crash

Mortgage defaults

Bankruptcies

Layoffs

Store closings

Cashless society

Cashless transactions

Emergency worldwide cash management

Emergency worldwide purchase transaction management

Mark, name, number of the beast

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