The Recession That Never Was Is Back, And This Time Its Out For Blood

Stocks continue to rebound with the S&P 500 rising once again. All the talk is about the Fed cutting rates and the recession that is on the horizon. It is tiring. I feel like they have been saying the same thing for the past five years, but yet it never comes. There likely will be a recession again at some point down the road. But, how can you go into a recession when you never had any real growth in this latest “recovery” — I still don’t know how we can be in recovery after a decade, but anyway. Look at the chart below; the GDP just reached 3% growth for the first time since 2005. How can you have a slow down if you never sped up, to begin with?

For the most part, the growth we have witnessed over the last 15 years would have been unacceptable levels in any other time. Look at the chart above, in the 1990’s we had just one blip of 2.5% growth. For most of the 1960 and 1980s, you could say the same thing. Except today’s slow growth environment has been accepted as the norm. So anyway, I’m feeling down now.

The latest GDPNow reading suggests the second quarter is growing at about 1.5%. But remember that the first quarter started slow and strengthen over time, So let’s give it time to see how it develops.

Meanwhile, non-farm productivity increased by 3.4% while unit labor cost plunged by 1.6%. Estimates had been for 3.4% and -0.08%, respectively. The chart below shows pretty healthy increase productivity.



I know, I know, we aren’t allowed to talk about the Services PMI’s, because it is a forbidden statistic that would suggest all is well in the economy. You know, we do happen to live in a services-based economy. Yeah, it’s true, really –about 80% or so. This month that reading rose to 56.9, better than April’s 55.5.

Meanwhile, the employment component of the index increased to 58.1, better than Aprils 53.7. Certainly not the recessionary type of numbers we have heard the mainstream talking about, sorry.

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Disclosure: Michael Kramer and the clients of Mott Capital own TSLA  and V

Disclaimer: This article is my opinion and expresses my views. Those views can change at a moment's notice when ...

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