This month the economic surveys by the five regional Feds which conduct them - New York, Philly, Richmond, Kansas City, and Dallas - have assumed additional importance as among the likely first warnings of impacts from T—-p’s trade wars. 

This morning the last manufacturing survey for the month, from Dallas, was released, and declined sharply. Below is the April update of the new orders component of all five:

• Empire State up +6.1 to -8.8
• Philly down -42.3 to -34.2
• Richmond down -9 to -13
• Kansas City up +1 to -11
• *Dallas down -19.9 to -20.0
• Month-over-month rolling average: down -18 from +1 to -17

Some other observers have also been keeping track of these surveys. Here’s a graph of the above new orders indexes including all of them except for this morning’s update from Dallas:

(Click on image to enlarge)

The average now is as bad as it was at its worst at the end of 2022. 

I’ve also been keeping track of the same regional Feds’ non-manufacturing service sector surveys. Dallas will not report until tomorrow. Here are the other four:

• Empire State down -0.5 to -19.8
• Philly up +1.3 to +6.9
• Richmond down -16 to -30
• Kansas City up +3 to +3
•  

The average for service so far this month is -7. Here is a similar graph of those surveys:

(Click on image to enlarge)

Again, the average is about where it was at its worst in 2022. But then global supply chain pressures were easing post-COVID; now they are almost certainly rapidly worsening. 

In general the regional average for the Fed surveys is more volatile than the corresponding ISM index, but usually correctly forecasts its month-over-month direction. Last month I closed my report on the average of the two ISM surveys with the comment that

“For March alone, the economically weighted headline average was 50.4, but the new orders weighted average fell into contraction at 49.1. The three month economically weighted average for the manufacturing and non-manufacturing indexes combined is 51.8 for the headline, and 50.9 for new orders.

“Because it is only one month in the new orders component that has fallen below 50, we aren’t quite in the yellow caution zone yet. But if next month’s readings duplicate this month’s, the new orders component will give at very merit the yellow caution flag.”

The regional Fed reports suggest that yellow caution flag is very likely to be hoisted when the April reports come out. And in case you haven’t seen this elsewhere, here is what is coming with trans-Pacific contained shipping to the West Coast:

We could be in a recession in a month.

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