Some weaknesses surface in the latest ISM services report. Here are the details.
Please consider the November 2024 ISM® Services Report On Business® emphasis mine.
What Respondents Are Saying
- “Federal Reserve interest rate cuts have not had the desired effect on mortgage rates yet. With election results mostly determined, expansion of residential construction is anticipated, but the unknown effect of tariffs clouds the future.” [Construction]
- “All operations are normal at the moment. Nothing local or national that is having any major effect on our operations.” [Educational Services]
- “Higher level of activity is driving the need for additional resources.” [Finance & Insurance]
- “We have concern after the presidential election that tariffs will affect prices for electronics and components in 2025.” [Information]
- “Domestic lead times still seem very long. We are having to go to China for many electrical equipment requirements. Even after tariffs, the price is half, and so are the lead times.” [Management of Companies & Support Services]
- “Election results and the potential tariff changes would impact inventory and lead to higher prices in the hospital supply chain. What we saw during COVID-19 with startup U.S. production is a warning sign again.” [Professional, Scientific & Technical Services]
- “Construction materials are shorted or hard to get due to increased construction projects in the area and (in the) U.S. Sometimes projects are delayed due to this.” [Public Administration]
- “We finished a solid quarter and are planning on a similar holiday period. Not breaking any records, but positive.” [Retail Trade]
- “Still waiting to see how presidential cabinet picks shake out, if they are confirmed and how they will affect our operations going forward. Holding capital projects now until the cabinet is complete and we know how federal funds will be dispersed going forward.” [Transportation & Warehousing]
- “Even though we are reducing our spending and our employment levels, we have a positive outlook for 2025 performance with expected reinvestment of funds.” [Utilities]
Respondents seem concerned over tariffs and Trump administration policies.
ISM Manufacturing Contracts 8th Month
On December 2, I noted ISM Manufacturing Contracts 8th Month and the 24th Time in Last 25 Months
Details suggest manufacturers are scrambling as best they can to avoid Trump’s tariff threats.
Manufacturing and non-manufacturing (services) groups are still trying to get a handle of Trump’s tariff threats and policies.
Also note rising prices despite weakening growth with contracting exports and backlogs.
One of my big concerns is how China might respond to tariffs. For discussion, please see China Halts Rare Exports Used by US Technology Companies and the Military
Unrelenting inflation, anger rising for a large swath of folks, unlimited massive wealth by a market that rises daily widening the chasm. Policy makers and corporate leaders ignoring the disconnect but when it blows, and it will, they will be ill-equipped to handle it as the complacency and enrichment has persisted for oh so long.
90 months of rising prices, many of those rises many standards of deviation above the mean.
Imagine when the debt ceiling is reimposed. What if DOGE actually takes hold and we have actual cuts. That deficit spend being removed is going to be removed from places accustomed to receiving it and, with luck, it will be removed permanently.
Markets are confident either it won’t happen, won’t be significant or it won’t impact them. But markets also pretending multiple-expansion, aka higher valuations relative to actual earnings, will go on indefinitely.
Oh a global comeuppance is overdue and starting in many places. Nov 5th was a large shot here in the U.S. Thanks to Mish I know what’s happening in France, UK, etc.
“What if DOGE actually takes hold and we have actual cuts.” DOGE cant do shit since it’s not a real agency but even if they were all spending is appropriated by congress. congress needs to fix the budget
Enough Said:
https://www.statista.com/statistics/1032048/value-us-dollar-since-1640/
…and why everyone is scared shitless for the future!
Chipotle says it’s raising prices 2% in response to inflationhttps://www.nbcnews.com/business/consumer/chipotle-says-raising-prices-how-much-and-why-rcna182864
Mish, do you think the economy could survive a stock market which actually reflected true value and profits? I read your posts and there’s a fascinating disconnect between the real world of the folks, detailed in your stats and articles, and the financialized “Everything Bubble”. I talked with an auto journalist this morning about Tavares’s exit from Stellantis, driving the firm into the ground yet departing with generational-changing wealth…Meanwhile everyone else gets hosed. Gov workers and bureaucrats never truly fired or punished while CEOs paid handsomely in spite of failure. It’s the kind of stuff that drives populist rage into going “Commie”. (Even worse)
S-T-A-G-F-L-A-T-I-O-N out as far as the eyes can see.
Our economy is growing around 3% per quarter. Relative to the last 20 years, that’s NOT stagflation.
Uhhhh….how much of that is inflation. I mean that’s what stagflation is; low output *after* inflation is factored in. For the last twenty years for your post to apply to the real world.
Darn still no recession?
Trump’ll fix it.
Nope…recession is a thing of the past. We simply keep doing what we are doing……borrow money to keep everything running smoothly.
Borrowing your way out of debt is the easiest thing in the world. No reason to stop now and start looking for chairs for when the music finishes.
Things are going GREAT for the Billionaires. Imagine having so much money that there will never be a Budget or payment worry ever again?
Absolutely dreadful economy.