Faster Fall in US Private Sector Output Amid Weak Client Demand
The S&P reports a Faster Fall in US Private Sector Output Amid Weak Client Demand
- Flash US PMI Composite Output Index at 45.0 (July: 47.7). 27-month low.
- Flash US Services Business Activity Index at 44.1 (July: 47.3). 27-month low.
- Flash US Manufacturing Output Index at 49.3 (July: 49.5). 26-month low.
- Flash US Manufacturing PMI at 51.3 (July: 52.2) 25-month low.
Sharp Decline
US private sector firms signaled a sharper fall in business activity during August, according to latest ‘flash’ PMI™ data from S&P Global. The decrease in output was the fastest seen since May 2020 and solid overall. The rate of contraction also outpaced anything recorded outside of the initial pandemic outbreak since the series began nearly 13- years ago.
Though modest, the drop in new orders was the sharpest in over two years. New sales were weighed down by weak domestic and foreign client demand, as new export orders fell further and at a solid pace.
The rate of input cost inflation eased for the third month running midway through the third quarter, with input prices rising at the slowest pace for a year-and-a-half. That said, the pace of increase in operating expenses remained historically marked, with firms linking hikes in cost burdens to increased interest rates, and higher prices for a range of raw materials and transportation.
Weak client demand and lower new orders led firms to scale back their hiring efforts, as employment rose at the slowest pace in 2022 to date. Although some companies continued to note challenges finding suitable replacements for voluntary leavers, a growing number of firms stated that uncertainty and rising costs led them to delay the immediate replacement of staff.
Consistent With Recession
The entire report is consistent with recession, in contrast to ISM which allegedly covers the same things.
On August 3, I reported ISM Services Smashes Estimates to the Upside, S&P Services Is Deeply Negative
Given that the S&P PMI for services weakened further, from 47.3 to 44.1, the next ISM report rates to be interesting.
Negative surprises in ISM reports tend to result in a steep dive in the Atlanta Fed GDPNow forecast.
Housing is also very consistent with recession. Note that the New Home Sales Crash Accelerates, Sales Down 12.6 Percent in July
Hello Recession Doubters
New home sales are down a whopping 38.5 percent since January!
When have we seen housing data this week when the economy was not in recession?
The S&P PMI report confirms.
This post originated at MishTalk.Com
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Mish
In 2010, the PBOC’s RRR went to
18.5% – “to sterilize over-liquidity and get the money supply under control in
order to prevent inflation or over-heating”
As
I said: The only tool, credit control device, at the disposal of the monetary
authority in a free capitalistic system through which the volume of money can
be properly controlled is legal reserves. The FED will obviously, sometime in
the future, lose control of the money stock.
May
8, 2020. 10:38 AMLink
which money is being utilized, the flow of savings’ products into real investment
outlets. These nonbanks are incapable of either creating or destroying credit,
of directly adding to or subtracting from the money stock.
The U.S. Senate Committee on Banking, Housing, and Urban
Affairs and the House Committee on Financial Services should pursue every
possible means for promoting the orderly and continuous flow of monetary
savings into real investment which makes a contribution to labor and materials
(not financial investment, the transfer of title to existing goods, properties,
or claims thereto).
There will come a time (unpredictable) when it will be
impossible for the government (federal) to collect enough in taxes to pay all
of its expenses, including interest on the national debt. The Gov’t can of
course borrow an indefinite amount through the Fed. (concealed green backing)
given a few changes in existing law. But that would lead to hyper inflation –
i.e., a collapse in the credit of the Gov’t.
So the easy way, is the way the French did it in 1960.
Simply say that beginning Jan 1 (or any other date), new dollars will be
issued, and that each new dollar is worth 100 old dollars. Then follow that up
with a largely state controlled economy.
In 1960, the French economist / mathematician Jacques Rueff,
during Charles de Gaulle’s presidency, converted the old franc, to a nouveau
franc, equal to 100 of the old franc. However, even with this substitution,
inflation continued to erode the currency’s value, though at lower rates of
change, in comparison to other countries. And this new franc equaled 20 cents
to a U.S. dollar. The old rate was 5.00 to a dollar.
In 1960, the French franc, which was one of the weakest
currencies, overnight, became one of the strongest. Correcting policies
included plans to 1) balance the budget, 2) stabilize the currency, and 3)
eliminate currency controls.
The gold content of the franc increased 100%, & 1)
foreign exchange rates, and 2) France’s internal prices, reflected the
conversion overnight. Internally, prices dropped about 90 per cent, and the
foreign exchange value rose from about 0.238 cents per franc, to about 20.389
cents per franc.
Domestically, France was on a managed paper standard;
externally, on a modified gold bullion standard. With the new policies,
France’s economy strengthened, and the franc became fully convertible @
approximately its gold par, into gold for foreign exchange and into foreign
currencies.
With the introduction of the Euro, the franc in Jan. 1,
1999, was worth less than 1/8 of its Jan. 1, 1960 value.
Federal Reserve Board –
Central Bank Digital Currency (CBDC)
The target is the underground economy (“the part of a country’s
economic activity that is unrecorded and untaxed by its government; the black
market”).
Thank you so much for those investment ideas. So nice to see that here! I will have a look at each one.
No money stock figure acting alone is adequate as a “guidepost” for monetary policy. If you get a 200% increase in the primary money stock:
“Quantity leads and velocity follows” Cit. Dying of Money -By Jens O. Parsson
As Dr. Philip George pointed out:
from hand to hand but are entirely the result of movements between demand
deposits and other kinds of deposits.”
This is because there is no incentive to move their accumulated savings out of
demand deposits.”
problem is falling consumption.”
Now I get to complain. You do a lot of shorthand here. I could go on, but sometimes Occam’s Razor is best.
Finally, I am the grandson of immigrants who fled the Great German Inflation. #1-#5? Who am I to argue (see praise above)? Now tell me why he and his fellow workers were paid twice a day, allowing them to rush out and buy food before the prices went up? (see complaint above)
Our economy is merely advancing toward a more sustainable platform for future growth, thanks to the wise and benevolent leadership of Joseph Cornelius Biden.
reverse. Powell eliminated reserve
requirements against commercial bank deposit liabilities. And the last vestige of
legal reserve and reserve ratio requirements against the Federal Reserve Note,
demand deposit, and inter-banks demand deposit liabilities of the Reserve banks
was eliminated in 1968. Today the Federal Reserve Note has no legal reserve
requirements, and the capacity of the Fed to create IBDDs has no legal limit.
These IBDDs are owned by commercial banks; they are bank free-gratis legal
reserves and can be converted dollar-for-dollar into Federal Reserve Notes. The
volume of IBDDs is almost exclusively related to the volume of Reserve Bank
credit. When Federal Reserve Banks expand credit, for example by buying U.S.
obligations, the balance sheets of the Banks reflect an increase in earning
assets and an equal increase in IBDD liabilities, i.e., free-gratis legal
reserves (not a tax).
of loan funds,
the difference between means-of-payment money & liquid
assets,
the difference between financial intermediaries & money
creating institutions,
don’t know that interest rates are the price of loan-funds,
not the price of money,
that the price of money is represented by the various price
(indices) level,
maintained and deflationary effects avoided”…
aggregate demand and therefore produces adverse effects on gDp”…
time-deposit banking, would tend to have a longer-term debilitating effect on
demands, particularly the demands for capital goods.” Circa 1959
unlimited transaction deposit insurance was reduced to $250,000:
“We’re close to seeing the real power of OMOs”
“R-gDp is likely to accelerate earlier and faster than anyone now expects.
The RoC in M*Vt before any new stimulus is already above average. With low
inflation (given some deficit resolution), Jan-Apr could be a zinger”
Then we got the “taper tantrum” and subsequently
above average R-gDp and N-gDp growth rates by putting savings back to work (by
increasing money velocity).
My forecast for a: “Zinger” – a surprise, shock,
or piece of electrifying news.
So we had a “taper tantrum” and a temporary rise
in gDp:
That’s called a “predictive success”. “The only relevant test of the validity of a hypothesis
is comparison of prediction with experience.” – Nobel Laureate Dr. Milton
Friedman
Dr. Philip George – October 9, 2018: “At the moment, one can safely say that
the Fed’s plan for three more rate hikes in 2019 will not materialise. The US
economy will go into a tailspin much before that.”
– Joe
The EUROZONE — froze savings, by full guarantees of
bank-holding company debt (“Bull By the Horns”, pg. 113 Sheila Bair). That’s what killed it.