There are three indicators that I find interesting.
Housing inventory is rising.
Consumer confidence is declining.
Retail sales are declining along with a gloomy Walmart forecast.
These are all occurring in a context where inflation is rising, thousands of government employees are losing their jobs, insurance rates of all kinds are increasing much faster than inflation, and the major global economies (EU, China, Japan, South Korea) are slowing.
This has the feeling of a balloon about to deflate.
@btresist thank you for your excellent post. Please post links to these indicators so I can add them to the Control Panel and watch them weekly.
Thanks,
Wendy
What is striking to me is that the inventory is rising rapidly in places like Florida and Texas. These are also places where insurance rates are rising rapidly. Still way too early to call it a trend but it could be some serious overbuilding is occurring due to overly optimistic assumptions about population growth.
Consumer confidence is from the conference board US Consumer Confidence
It has been stuck in a zone since the pandemic but the decline in the last couple of months feels different to me, like the start of a trend rather than just random fluctuation. But that’s just a feeling.
Retail sales is like housing inventory. I don’t think there is one single repository of data so best to do a google and extrapolate from multiple sources. KPMG is an example Retail sales stumbled badly into 2025
What is striking about retail sales is that it is declining before the price hikes from tariffs have hit.
My take is that much of the past resilience in the American economy comes from faith that the American government knows what it is doing. I think that faith has been shaken of late. I don’t see that changing anytime soon.
This is a shocking statement to anyone that’s done the simple arithmetic!!! Should we do the arithmetic here yet again? Let’s do it with fake, but truly representative, numbers. But we will use rosy assumptions, interest on debt is only 3%, GDP goes up by 3.5% EVERY SINGLE YEAR, no recessions, no slower growth, no expensive wars, no issues at all. And assume we only spend $1T more than revenue each year (this is WAY down from 1.8T recently).
If this is what anyone considers to be “knowing what it is doing”, then please explain what exactly you mean by that. And if anyone wants to use different assumptions, go ahead and post them here for us to see.
Sure. During the two most recent economic crises we had democrat presidents do what had to be done to keep the banks and auto industries from failing (Obama) and to keep households from going massively in debt and losing their homes (Biden). Both also did what they could to curb the debt in an environment where raising taxes wasn’t possible. Obamacare substantially slowed the rise in healthcare costs to below the rate of inflation. https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2778346#google_vignette
Biden invested in US infrastructure, which will greatly increase US productivity and would have let the trump tax cuts end, which would have significantly increased US tax revenues. Given the difficult circumstances they had to work with, both did well to restore confidence in the US economy at substantial political costs.
In contrast, the repubs are doing what is politically expedient and in doing so are rapidly losing the confidence of US consumers and businesses. We’ve already seen evidence of slowing retail sales, softening housing market, plunging consumer confidence. Now we have evidence of reduced hiring.Unemployment claims rise to 242,000, the highest in 3 months - CBS News
Again, far too early for anything conclusive, but by the time the public sees conclusive data the market will have already reacted. What we are seeing is multiple evidence of economic pessimism occurring with an administration that only knows how to create uncertainty. That’s a bad combination.
The Atlanta Fed runs a program that provides a running estimated of real GDP growth based on real-time data. It is a mathematical model with no human interpretation. So it does not try to extrapolate the impact of possible future tariffs but rather simply reflects the current economic performance of the country.
A month ago, GDPNow showed 3.9% growth for the first quarter. A week ago that was reduced to 2.3% GDP growth. Today the estimate is for a -1.5% contraction.
Pretty sobering how quickly the economy seems to be turning.
I’m guessing retaliatory tariffs by other nations probably won’t help exports. That’s the nature of protectionism.
Another update supporting an inflection point. Layoffs in the private sector may be increasing.
Declining consumer confidence + declining retail sales + softening housing market + reduced hiring and now evidence of layoffs increasing in both public and private sectors.
I am starting to get worried that this administration is manufacturing a recession.
Well, they did promise 2 years of pain. And people voted for it. Go figure.
Recession is coming. I’m now 40% cash and some treasuries in my IRA, with limited exposure to tech in the equity side. Whereas 18 months ago I was 50% QQQ.
I’m not sure that’s true. My theory is that too much idle money laying around gets shoved into places that are unproductive (economically speaking) like art, land, metals, and crypto . Those are all speculative bets resting on the greater fool.
Stocks, by contrast, means people own a productive asset, making things, selling things, contributing to the economy.
There have always been so-called “stores of value”, and people think crypto is, but my suspicion is that when the brown stuff hits the fan it will be crypto that is the first to disintegrate and be flung across the room.
It’s already taking a big hit today, right now, as I type this. Crypto has always acted like a high-risk asset. It has never acted like a store of value.
Money as a store of value is a myth, a delusion, it depends entirely on people’s willingness to honor it. Money is value’s accounting system, a weird system that has no fixed, standard, unit of value beyond the numbers on money itself.
I am not an owner of crypto, but Trump sure is a fan of what he once referred to as a Ponzi scheme. I can see him ruining the value of the dollar and substituting crypto as the nation’s “currency.” Whatever makes him richer is the unstated goal, with no regard for what is best for the country.
It’s quite possible. Maybe their idea is to get the recession over with in 2025, and get the lower interest rates that usually follow, so it doesn’t interfere with elections in 2026 and 2028. Possibly not a bad strategy, GHW Bush lost the election because the recession happened at a particularly inopportune time, just leading up to his second campaign.
