Wednesday, October 1, 2008
Today's release of the ISM manufacturing index may signal that the economy has finally entered the most-anticipated recession in memory (recessions nearly always come as a surprise, but many forecasters have been calling for a recession for the past year). If so, it will be the first recession in my lifetime to have not been triggered by a severe tightening of monetary policy. The Fed has been quite accommodative for most of the past several years, so it's possible this could end up being a relatively mild recession. Corporate profits are still very strong, which is unusual in a recession, and capital spending has been growing for the past year, another anomaly. Still, the last month's ISM drop looks a bit suspicious, coming out of the blue, so I'm still a recession skeptic.
Posted by Scott Grannis at 8:42 AM