The ISM Services report was a disaster. Based on the current report, the overall economy dipped into contraction.
Please consider the Please consider the June 2024 Services ISM® Report On Business® emphasis mine.
The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In June, the Services PMI® registered 48.8 percent, 5 percentage points lower than May’s figure of 53.8 percent. The reading in June was a reversal compared to May and the second in contraction territory in the last three months. Before April, the services sector grew for 15 straight months following a composite index reading of 49 percent in December 2022; the last contraction before that was in May 2020 (45.4 percent). The Business Activity Index registered 49.6 percent in June, which is 11.6 percentage points lower than the 61.2 percent recorded in May and the first month of contraction since May 2020. The New Orders Index contracted in June for the first time since December 2022; the figure of 47.3 percent is 6.8 percentage points lower than the May reading of 54.1 percent. The Employment Index contracted for the sixth time in seven months and at a faster rate in June; the reading of 46.1 percent is a 1-percentage point decrease compared to the 47.1 percent recorded in May.
Miller continues, “The decrease in the composite index in June is a result of notably lower business activity, a contraction in new orders for the second time since May 2020 and continued contraction in employment. Survey respondents report that in general, business is flat or lower, and although inflation is easing, some commodities have significantly higher costs. Panelists indicate that slower supplier delivery performance is due primarily to transportation challenges, not increases in demand.”
Respondent Comments
- “Sales and traffic remain soft compared to last year. High gas prices in California and constant news about inflation and restaurant menu prices are culprits.” [Accommodation & Food Services]
- “Costs seem to have stabilized but are still higher. The company is holding steady to see what the election will hold.” [Construction]
- “Currently, our operations are normal, but we are experiencing slightly higher costs due to the increase in fuel. We are at the end of our fiscal year, when an increase in expenditures is typical.” [Educational Services]
- “Steady, with no major shifts in pricing or availability of services.” [Finance & Insurance]
- “Demand for services has moderated after near-record patient levels in the last month.” [Health Care & Social Assistance]
- “We are still experiencing supply chain challenges with the increased cost of chemicals, as well as the domestic and overseas freight costs associated with them.” [Management of Companies & Support Services]
- “Slightly higher prices across the board, but less pricing pressure for some items. Still long lead times for heavy equipment, fire apparatus, ambulances and the like.” [Public Administration]
- “Inflation continues to be a general concern for both purchasers and sellers. For example, with inflation continuing, will customers have enough discretionary funds to spend?” [Retail Trade]
- “Supply issues have calmed down. Prices on many products remain high, with no sign of decreases.” [Utilities]
- “Market seems to be slowing in June. This is complicated by increased ocean freight rates and tight container bookings.” [Wholesale Trade]
Stagflationary Comments
For 85 consecutive months, prices have increased.
Eight of ten respondent comments complained of prices.
This reeks of stagflation.
Unexpected Report
The Bloomberg Economists Consensus was a reading of 53.0 in a range of 52.0 to 55.5.
The actual report was 3.2 percentage points below the lowest economist’s estimate.
ISM Manufacturing New Orders and Backlogs in Steep Contraction
On June 3, I reported ISM Manufacturing New Orders and Backlogs in Steep Contraction
The Manufacturing ISM was in contraction for 16 months went positive for a month and is contracting again for two months with order backlogs falling for 20 months.
Services have joined the party with a stagflationary looking report.
As always, it is not the data that matter but what the model forecast.
However, I highly doubt the model expected the two terrible reports today and a third bad one.
The other terrible report was factory orders and the bad one was international trade. I will comment shortly.
The elderly man with a poor memory will get us out of this. Ask him…. he’ll tell you.
Biden crashes as the economy crashes. Anyone surprised? Good thing Hunter is in the WH to fix things.
But I saw on TV that Biden knows what he is doing. Sharp as a Tack and fully engaged.
They were all saying four more, four more. My guess is they mean four more years of this.
More like four more days…assuming that gives Hunter and Jill enough time to negotiate his golden parachute.
These people truly have no shame. Hopefully the American people will choose to turn off the soap opera.
Are you not entertained? By the flunkies… biden and trump? It’s actually pretty bad acting … but then again … you don’t need academy award winning skills to run for Potus
Hunter is a financial genius I have heard.
Smartest guy Old Joe knows. Just ask him.
Been a long time since a whole generation got to discover that to spend it has to come from someplace.
This revelation as silly as it seems has been disregarded for quite some time.
So we now have demand cracking and cracking hard as that wallet is empty and the credit card is maxed out.
Contraction goes along with loss of purchasing power that Stagflation creates
Going to be awhile before this runs its course and the next growth cycle starts again..
There will not be another growth cycle – there cannot be
THE PERFECTSTORM (see page 59) : The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy. But the critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel
https://fasteddynz.substack.com/p/the-perfect-storm
“Please consider the Please consider….”
Old neighborhood joke:
“You said that twice, you said that Twice.”
Seven unrelenting years of price increases! Unabated! Asset holders just sopping it up at the trough. Folks fortunate enough to own a home, especially outright or with that silly 3% mortgage just continuing to win. At the expense of all others. Until the checkvalve is removed on the one-way shunt of wealth the angst will persist. We need the recession of which you speak and we desperately need many months of price decreases. Sure it’ll be painful but it already is painful for a large swath of the population. Gee, you mean the party can’t persist forever and trees don’t grow to the sky?!
I suspect folks will read this as RELEASE THE (monetary) KRAKKEN because we must not have it go the other direction, if even only currently in the tea leaves.
“Folks fortunate enough to own a home, especially outright or with that silly 3% mortgage just continuing to win.”
And even that, only short term and myopically.
Similarly situated Argentinians have been “winning” this way; non-stop; ever since Peron popularized the racket. And sure: Compared to those Argentinians who are on the “be robbed to pay for the transfers” side of the ledger; the ones being handed a a share of the loot are doing better.
But the “homes” that they have been told have become oh-so “valuable”, are still just falling down, 50 year old, decayed, moldy dumps. Which even a so-called oppressed” Uighur in infinitely freer and better ran China would turn his nose up at in utter disgust. Just as they would Pelosi’s $30mill sourdough-mold-infested teardown; here in our own little Argentinita.
While no company actually creating any value have been able to do so for decades; since the cost of keeping the regime favored imbeciles secure in their blind, childish faith that the mold in their walls; and the dustmites in their Fed-propped-up paper; is somehow magically “creating wealth”; inevitably render any possible productive enterprise completely unaffordable and uncompetitive.
So yes: To the braindead dumbeffs with no talent, no vision, no value, no clue and no use; whom the regime have arbitrarily handed the unearned opportunity to preen around and pretend to be “great” and “smart” by having a bigger teardown than their more productive neighbor down the street; it may appear as if things are working out OK. Being too stupid to recognize you are, feels good too, and all…
But it still all falling apart. Nominally “owning” “shares” of something invariably net negative, is still only “owning” a share of a whole lot less than nothing at all. And a $10million mold shack in a neighborhood, and a nation, filled to the brim with nothing but genuinely retarded idiots with no future and no present and not even any meaningful value; is still just that.
The Chinese apartment buildings built so the Chinese can place their wealth and see it grow are falling down ruins. There are so many of them that they could fit another China in them but since China’s population is declining rapidly those apartments will never be lived in nor even sold because there are no buyers. Keynes said you can create economic activity by paying people to dig holes and then fill them back up and this is the supreme example of that at work. How much of China’s GDP is due to these totally useless apartments and houses being built and which will end up as heaps of rubble in a few years?
Kinda like infusing a trillion of new debt every few months into the US economy and celebrating stock market gains and claiming the US is prospering.
“How much of China’s GDP is due…”
However much those who make up that particular arbitrary nothing, wants it to be. No different from in the US.
The infinitely more meaningful difference being: Per you, Chinese people have more housing than they know what to do with. While Americans, like Argentinians, are increasingly homeless. Trying to twist something THAT singularly lopsided into yet another; of all things; we-the-greatest-says-Man-On-Teeveee Fox News rah-rah chant; has got to be somewhere close to the dictionary definition of a lost cause. America is now so destitute and incompetent, that Americans can’t even afford roof over their heads. That’s not something to brag about, dude! No matter what some illiterate indoctrinator may say about HFT an KJR and MDB and GDP and whatever else neither he nor his intended audience of indoctrinated illiterates will likely ever comprehend the utter nonsensicality of.
Housing units are more valuable than Not-housing units. Just like cars, ships, factories, roads… More of valuable things, adds up to more wealth.
In 1971, Chinese people starved to death. While Americans went for hikes on the moon and were so wealthy they could buy houses next to Golden Gate Park from doing little more than tie dying tshirts for a few hours a day in between getting stoned. America was a rich country back then. China was not.
While now: Chinese people seem to have more houses than they know what to do with. While Americans are now too poor to have access at all, to such once-were commodities. Instead working three drug-tested jobs to afford paying some leech in order to be “permitted” to live in a cardboard box. And even the few leechionaires who have been handed a cut of the looting at the core of the destruction: For all the millions of debasement loot they pay, they still only get to live in a 50-years-decayed version of what the tie dye stoners would take for granted back when it was never, less decayed, better and hence more valuable. The sheer decay is so grotesque it’s hard to imagine even the Soviets/Russians unleashing all they had on “us”, could have done a “better” job of utterly destroying it all.
That’s the result of unchecked value destruction, malinvestment, theft, waste and all the rest, in practice. Just as in Argentina. A bunch of complete wastes of space being handed all wealth; hence power and influence; on account of cold, hard zero; or even less; useful contribution of their own. Solely by debasement and government overreach. As opposed to anything even remotely resembling free market allocation of anything.
And that’s compariing with China! Talk about laydown: A comparison against a bunch of communists…. When you can’t even outperform commies, you know the rot is of truly outsized proportions. And yet, the well indoctrinated dimbulbs pliantly sit there and chant nonsense their indoctrinated little brains have been told since birth to mindlessly regurgitate, in order for Massa to toss them a few more; increasingly moldy; crackers than their more useful and productive, less singularly illiterate, brethren are allowed to keep of what they produce.
“Folks fortunate enough to own a home, especially outright or with that silly 3% mortgage just continuing to win.”
I wouldn’t call it winning, holding even maybe. My housing cost is not increasing except for insurance, utilities, and maintenance. All that extra smoke and mirrors equity would vanish if I moved. Exchanging one overpriced house for another is no windfall.
But..but what about the wealth effect?
It’s either that, or the economy staring into the abyss, and the betters, Nobel prize winners and economic group thinkers swimming naked.
Wasn’t Ben Bernanke nominated for Nobel prize. Oh, the irony.
He did prevent the global economy from collapsing … we got another decade + of living because of his policies
“He did prevent the global economy from collapsing”
Directly translated from Newspeak: He did prevent a nothing-but-theft-racket from collapsing.
“we got another decade + of living because of his policies”
Not of living. Of getting robbed.
There is NOT.ONE.SINGLE.POSSIBLE benefit, of “the system”,”the financial system” nor “the economy. Literally. Not one. Replacing it with nuclear armageddon, may not strictly yield much benefit. But replacing it with absolutely anything else: From Chavezonomics to Taliban style Anarchy to whatever, would; guaranteed; be a benefit by now.
I used to think Bernanke was a corrupt idiot…
Then I came to my senses… the Fed owns the money machine … why would they engage in corruption? They have all the money in the world… and the power…
And to think Bernanke was dumb… I shook my head – what an idiot I was … clearly he is not dumb…
Then I went looking for reasons why the Fed would burn their house down … what did they fear?
And I found this — https://fasteddynz.substack.com/p/the-perfect-storm
The thing is … when I am wrong .. I do not double down… I use it as a learning experience
Is he still at Renaissance Capital?
When you run low on cheap energy … and shale, deep sea, and tar sands comprise a large proportion of your energy supply (all expensive)… this drives inflation … and kills growth…
You can compensate with debt and reducing interest rates — but eventually you poison the economy…. and you have to raise interest rates or you end up with hyperinflation
But as I said you have poisoned the economy … the massive debt loads need to be repaid — at much higher interest rates…
There is NO WAY out of this.