The economic data is still presenting a mixed bag on whether a recession is coming or is already here.
For example, industrial production and manufacturing increased in August contrary to the ISM data that slipped negative for the first time since May 2009. Industrial production is up 3.3 percent on a year over year comparison which indicates moderate economic growth. Overall, the economic leading indicators are still pointing up (anemically so, however) and a recession has never started when they have been advancing.
Much of the slowdown is being affected by the political headlines that are driving markets.
This uncertainty naturally creates a sort of self-fulfilling prophecy as business and consumers hold back. The bad news is that the economy is not growing at a rate that can significantly reduce unemployment or raise standards of living. The good news is that the economy is sort of bouncing along the bottom, and it is hard to get significantly worse. It is running more or less at what I call its replacement rate (e.g., people buy a car when the old one dies as opposed to upgrading because they’re doing well) and until the debt overhang is worked off, the economy will have a hard time taking off.
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