ISM Manufacturing Index Now In Recession Territory


1. US Manufacturing Sector Officially in Contraction Mode
2. Strong Consumer Spending Continues to Drive Economy
3. Is the Treasury Yield Curve Really Inverted? It Depends
4. Fed Cut Rates a Second Time to Fight Yield Curve Inversion


As regular readers know, I have been very positive about the economy in recent years, unlike many financial writers who have been predicting a recession for the last two years or longer – the so-called “PermaBears.” While I still don’t believe a recession is headed our way anytime soon, a key economic indicator just signaled that the manufacturing sector is contracting.

This indicator has signaled contraction prior to each recession over the last 50+ years, so we have to take it seriously. That’s especially true in light of the continued inverted yield curve which has also preceded each recession going back decades. While I don’t see a recession just ahead, the pendulum appears to be slowly swinging in that direction, as we’ll discuss today.

Yet as I have written recently, US consumers are not buying the left’s narrative that the economy is headed for a recession, and they continue to increase spending and consumption. Until that changes, the US economy should continue to roll.

The Fed cut interest rates a second time last week as was widely expected. I continue to believe the Fed is doing this because of the inverted yield curve, which as we’ll se below has happened prior to each of the last seven recessions.