IN THIS ISSUE:
1. US Economy Takes A Dive In August & September
2. Fed’s GDPNOW Indicator Has Plunged Since August
3. Two Bad Monthly Unemployment Reports In A Row
4. Are We Staring At A New Recession? Could Be
5. Fed To Halt Asset Purchases, Raise Rates Next Year
Overview – US Economy Takes A Dive In August & September
We all remember the COVID-19 recession which occurred in early 2020. It was a severe recession which saw GDP plunge over 30% last spring during the widespread lockdowns. The good news was the lockdowns ended quickly and the economy recovered all its losses, and then some, in the 3Q of last year. It’s been on a roll ever since.
The US economy grew by 4.3% (annual rate) in the 4Q of last year, 6.3% in the 1Q of 2021 and 6.7% in the 2Q of this year. The growth since last year’s brief COVID-19 recession has been the strongest in decades. Job creation has been outstanding.
However, as I must report today, there are storm clouds on the horizon. The economy appears to be rolling over to the downside in a hurry based on recent data for late August, September and so far this month. We all knew the economy was likely to weaken in the second half of this year, but the latest data indicates it is contracting much faster than most forecasters expected. In fact, GDP is plunging according to the latest data from the Fed!