RECESSION COMING?

Items indicating the economy may go into a recession.

(1) Decreasing carloads for train transport and overcapacity of trucking are good signs.
There’s no bottom in sight as the decline in carloads for large U.S. railroads widened to 5.5% in the third quarter, the biggest drop in three years, according to weekly reports from the Association of American Railroads. Shipments are down for autos, coal, grain, chemicals and consumer goods, with crude oil the only bright spot.*

(2) Millennials are increasingly going into financial debt.
The average American has three credit cards and a total balance of $6,506, up slightly from last year, according to Experian’s annual study on the state of credit and debt in America.**


(3) Outstanding consumer debt now exceeds $4 trillion, according to the Federal Reserve.
The average American has three credit cards and a total balance of $6,506, up slightly from last year, according to Experian’s annual study on the state of credit and debt in America.**

(4) A CNBC report says that the ultra-wealthy are expecting a recession.
To mitigate risks, 45% of them are already adjusting their portfolios, including shifting to bonds and real estate, while 42% are increasing their cash reserves.***

(5) Barclays analysis points to a slowdown in capital expenditures by companies.
Barclays used a machine learning tool to analyze company managements’ commentary on capital expenditures during earnings calls. The result revealed a weaker corporate sentiment, where companies are likely to trim investments in new or upgraded plant and equipment in the face of escalated trade tensions.****

(6) While the Treasury Yield Curve had inverted (short term notes higher than longer-term securities) for a part of this year (2019), lately it has become more normal (as of October 22, 2019).  An inverted curve is seen as a sign of a coming recession.
Harvey said the curve needs to stay inverted for three months to be reliable, so in this instance the duration means the indicator is “flashing code red” for a recession.
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The one bright spot, he said, is that those watching the indicator can, and sometimes do, plan ahead. The inversion is not a coincident indicator but rather one that points to downturns six to 18 months or so in the future. So businesses can react to it, for instance, by delaying spending plans until the storm passes.*****

* https://www.industryweek.com/supply-chain/railroad-loads-continue-decline-casualty-manufacturing-slowdow
https://www.cnbc.com/2019/10/16/ceo-of-the-largest-us-trucking-company-predicts-difficult-quarter-for-transport-industry.html
**  https://www.cnbc.com/2019/10/22/your-credit-card-debt-could-be-making-you-sick.html
*** https://www.cnbc.com/2019/09/24/a-majority-of-ultra-wealthy-expect-a-recession-and-are-hunkering-down.html
**** https://www.cnbc.com/2019/09/24/computer-analysis-of-ceo-transcripts-points-to-an-economic-slowdown.html
***** https://www.treasury.gov/resource-center/data-chart-center/interest-rates/pages/TextView.aspx?
https://www.cnbc.com/2019/10/08/inverted-yield-curve-guru-campbell-harvey-prepare-for-recession.html