Every time there’s data showing economic weakness in the U.S. or signs that we are in or quickly heading for a recession, the mainstream media tries to downplay it or even spin it.
The Institute for Supply Management recently reported that its manufacturing PMI dropped to an eight-month low in July due to a slump in new orders.
But Reuters says there’s no reason to be concerned because “that likely exaggerates the industry’s struggles as production at factories rebounded sharply in the second quarter.”
Don’t listen to the numbers, they’re just exaggerating things. The economy is fine. We’re not heading for a recession. Keep repeating those statements and maybe they’ll work like a spell from Harry Potter to hold off a recession.
In July, the unemployment rate jumped to 4.3%, triggering the Sahm Rule. Created by Federal Reserve economist Claudia Sahm in 2019, the Sahm Rule is an indicator that has accurately signaled nearly every U.S. recession since the 1950s based on historical data.
Steven Bell, chief economist at BMO, said, “[The Sahm Rule] has given no false positives and no false negatives since 1950 when there have been 11 U.S. recessions. It’s also accurate in terms of timing of a U.S. recession within a few months — much more accurate than standard measures like the yield curve. It is therefore something to be concerned about.”
However, Bell explained that he expects an economic slowdown rather than a recession despite the noted accuracy of the Sahlm Rule.
Suddenly, even rules that have never produced either a false positive or a false negative are wrong.
Fox Business reports on a new outlook survey from the Dallas Fed, which shows that manufacturing in Texas continues to show signs of weakness. Here’s the start of the story:
The Federal Reserve Bank of Dallas released its monthly Texas Manufacturing Outlook this week, which gauges the sector based on surveys of producers — and many of those manufacturers issued warnings in their feedback.
The report said the data shows weakness in the state’s manufacturing, but it also included comments from respondents that were edited for publishing – and several sounded the alarm about the condition of the economy.
One food manufacturer alerted the Dallas Fed to a sign that consumers are struggling.
“As the economy weakens, we are seeing modest growth in our category of dinner sausage,” the comment reads. “This category tends to grow when the economy weakens, as sausage is a good protein substitute for higher-priced proteins and can ‘stretch’ consumers’ food budgets.”
Another food manufacturer wrote, “Agriculture is hurting. No farm bill, weather and falling prices for our commodities while input costs increase are putting a big squeeze on our industry.”
A third commented, simply, “We are preparing for the recession.”