Please consider the December 2022 Services ISM® Report On Business®
Economic activity in the services sector contracted in December after 30 consecutive months of growth.
In December, the Services PMI® registered 49.6 percent, a 6.9-percentage point decrease compared to the November reading of 56.5 percent. A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent indicates it is generally contracting.
A Services PMI® above 50.1 percent, over time, generally indicates an expansion of the overall economy. Therefore, the December Services PMI® indicates the overall economy is contracting after a preceding period of 30 months of growth. Nieves says, “The past relationship between the Services PMI® and the overall economy indicates that the Services PMI® for December (49.6 percent) corresponds to a 0.2-percent decrease in real gross domestic product (GDP) on an annualized basis.”
Missing the Mark
Bloomberg Econoday had this to say ahead of the report: “The ISM services index has been surprisingly solid month after month, beating expectations once again in November with a 56.5 score. Econoday’s consensus for December is for another month of expansion at 55.0.”
The range of estimates was 53.0 to 56.0 with the actual at 49.6
ISM Manufacturing Now Signals Recession for the First Time in 30 Months
On January 4 I noted The ISM manufacturing index contracts for the 2nd consecutive month. It’s the lowest reading since May 2020.
Global Manufacturing Slump Continues at End of 2022 as Output and New Orders Fall Further
On January 3, I noted Global Manufacturing Slump Continues at End of 2022 as Output and New Orders Fall Further
Anemic Jobs Report
If you thought the December jobs report was strong, think again.
For discussion, please see Stock Market Cheers Weak Job Report, But Big Picture Still Looks Grim
Weakness is accelerating in every corner.
This post originated on MishTalk.Com.
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Mish
The consumer is now tapped out. And we have stagflation,
business stagnation accompanied by inflation. The level of interest rates
is not going to follow the Fisher effect (“tendency for nominal interest
rates to change to follow the inflation rate”). We will have higher
structural levels of interest rates due to outsized government deficits and
debts without QE. QE has its limits
under the payment of interest on interbank demand deposits. The U.S. $ will fall in foreign exchange markets.
After the peak in the 2nd Elliott wave, the 3rd wave will take effect.
Link:
“The 2006 Financial Services Regulatory Relief Act gives the Fed
permission to pay interest on reserves. The IOR rate was always higher than
“the general level of short-term interest rates” which is imposed in
the Law. “A Legal Barrier to Higher Interest Rates,” The Wall Street
Journal, Sept. 28, p. A13. Where are we now?
Wake up and smell
the coffee. The complete deregulation of interest rates was a ruse perpetrated
by the ABA.
The DIDMCA was a
monumental mistake. It caused the Savings and Loan Association crisis (as
predicted in May 1980) and the July 1990-Mar 1991 recession.
WSJ: “In a
letter of March 15, 1981, Willis Alexander of the American Bankers Association
claims that: ‘Depository Institutions have lost an estimated $100b in potential
consumer deposits alone to the unregulated money market mutual funds.’ As any
unbiased banker should know, all the money taken in by the money funds goes
right back into the banks, in the form of CDs or bankers acceptances or other
money market instruments; there is no net loss of deposits to the banking
system. Complete deregulation of interest rates would simply allow a further
escalation of rates by the banks, all of which compete against each other for
the same total of deposits.”
Written by Louis
Stone whom the movie “Wall Street” was dedicated to – Vice President
Shearson/American Express