Ominous Signals Possible Slowdown In Economy
There are several economic indicators showing ominous signals that the economy may be slowing down specifically in the manufacturing sector and here is why.
The ISM Manufacturing PMI has been contracting in recent months signaling there is a slowdown in manufacturing which can have several consequences including slower economic growth, job losses and a decrease in consumer spending if workers are laid off due to lower disposable income. The slowdown in manufacturing is further validated by the build up in U.S Crude oil inventories and falling durable goods orders. What this means is the demand for oil is going down and factories and manufacturing plants are actively reducing their use of crude oil which is a much needed commodity to conduct manufacturing. Durable goods are goods that have a life span of 3 years or more which could include new business equipment or new machinery. This has been declining in recent months signaling that investment in new equipment has been contracting which could be a sign that businesses are growing more pessimistic about the future and may want to allocate their money to other areas or just save more money in case of further manufacturing slowdown.
Last but certainty not least consumer sentiment has been trending down signaling that despite the historically low unemployment something is driving consumers to remain pessimistic and this could be for a variety of different and complex reasons including the effects of inflation possibly even this slow down in manufacturing or the fact that personal savings are very low and many people feel they are working so hard for so little.
Anyways with all being said these are defiently things to keep a watch on I would continue to monitor the ISM Manufacturing PMI, U.S Crude Oil Inventories, Durable Goods Orders and Consumer Sentiment.
Some additional indicators to watch could be
- Unemployment rate / If this starts to rise this can be a very bad sign that the weakness could spread.
- Strength Of Consumer Spending / If this starts to weaken it could signal that consumers are beginning to grow more worried and may not want to spend as much due to the fear of losing their job which could have a huge host of issues.
- Interest Rates / If interest rates continue to rise this can further put pressure on the economy by increasing the interest people must pay on their debt which can put further strain on consumers pockets.
Overall there are signs that things may not be completely breaking due to the historically low unemployment rate and consumers continuously showing their resilience and continuing to spend despite all of the negative consumer sentiment. However if the slowdown spreads and manufacturing continues to prolong the slowdown it could be an ominous signal that the economy is slowing down which can lead to a recession.
The ISM Manufacturing PMI has been contracting in recent months signaling there is a slowdown in manufacturing which can have several consequences including slower economic growth, job losses and a decrease in consumer spending if workers are laid off due to lower disposable income. The slowdown in manufacturing is further validated by the build up in U.S Crude oil inventories and falling durable goods orders. What this means is the demand for oil is going down and factories and manufacturing plants are actively reducing their use of crude oil which is a much needed commodity to conduct manufacturing. Durable goods are goods that have a life span of 3 years or more which could include new business equipment or new machinery. This has been declining in recent months signaling that investment in new equipment has been contracting which could be a sign that businesses are growing more pessimistic about the future and may want to allocate their money to other areas or just save more money in case of further manufacturing slowdown.
Last but certainty not least consumer sentiment has been trending down signaling that despite the historically low unemployment something is driving consumers to remain pessimistic and this could be for a variety of different and complex reasons including the effects of inflation possibly even this slow down in manufacturing or the fact that personal savings are very low and many people feel they are working so hard for so little.
Anyways with all being said these are defiently things to keep a watch on I would continue to monitor the ISM Manufacturing PMI, U.S Crude Oil Inventories, Durable Goods Orders and Consumer Sentiment.
Some additional indicators to watch could be
- Unemployment rate / If this starts to rise this can be a very bad sign that the weakness could spread.
- Strength Of Consumer Spending / If this starts to weaken it could signal that consumers are beginning to grow more worried and may not want to spend as much due to the fear of losing their job which could have a huge host of issues.
- Interest Rates / If interest rates continue to rise this can further put pressure on the economy by increasing the interest people must pay on their debt which can put further strain on consumers pockets.
Overall there are signs that things may not be completely breaking due to the historically low unemployment rate and consumers continuously showing their resilience and continuing to spend despite all of the negative consumer sentiment. However if the slowdown spreads and manufacturing continues to prolong the slowdown it could be an ominous signal that the economy is slowing down which can lead to a recession.
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