The Relentless Road to Recession
The comments below are an edited and abridged synopsis of an article by David Haggith
Many cannot see a recession forming, but it’s time to lay out the latest data to support a recession prediction.
Up for discussion: manufacturing a recession; services no longer serving investor denial; employment presents equal opportunity for either side of the argument; the failure of IPOs by snazzy companies that make no money; insiders walking away from their own stocks; corporate unprofitability; states that are already in recession; the three horsemen (markets) of the apocalypse have worsened for three years; the automobile market decline; retail’s slide; the housing market collapse; and the in-and-out yield curve.
Haggith says that the US annual deficit will surpass the trillion-dollar mark this year, and government largesse will take the economy nowhere. Many have said it would do that next year, but the Trump tax cuts and spending increases will fail so badly that the US will break the trillion-dollar deficit barrier sooner.
In other years when the deficit was high, the US was trying to climb out of the Great Recession. This year was supposed to be the year of plenty, the year of a great America when the Fed’s recovery, or the Donald’s economy, flew like a balloon over the 4% GDP mark. Unfortunately, it’s a lead balloon.
Also different is that America’s last monumental deficits of similar size came after a few years. This year’s federal deficit plots a new trajectory of inter-galactic flight as far as the eye can see.
It seems we are at a curious moment in time; parallels to late 2007 are running through the markets now. This doesn’t mean the market’s fate will play out as it did then, but the ingredients are there, and all that’s needed is a trigger.