The US economy is in serious trouble and heading south.
Yet, instead of hard analysis, most economists are providing platitudes to the USA in general.
The fixation on strong labour levels has completely misdirected the gaze of many from the main stage. Which are consumers with the lowest confidence since the 1950s. Retail sales, are now flat. Declining services and manufacturing sectors. Sky high property prices that are extremely vulnerable to a sharp reversal scenario unfolding.
Today we saw the latest Manufacturing PMI which was the lowest in two years.
Still expansionary, but the downward trajectory of the PMI should be of concern to all. Recent factory and other manufacturing data series have even suggested contraction is already at play.
I keep trying to remind people that the Great Depression started with manufacturing slow down. This time, the manufacturing slowdown stretches across China and Europe too.
The latest New Home Sales data showed yet another collapse in buying interest. While the rich have continued to shop and push up record price levels in some areas, for the United States as a whole, there has been a clear downward push in construction, borrowing and buying interest for some time.
Those recent record price settings are looking very much like a feeble last small skyrocket that having sparkled momentarily, can fall back to earth with a thud.
All of this data is compellingly worrying. There is no valley to look across to happy days on the other side. The US economic free fall is gathering pace, rather than bottoming.
Watch out, everyone. This is going to be ugly.
Who said Depression? I did.
Often, what happens is what no one expects. Hopefully only a recession, but never in modern times have the three largest economies in the world looked so simultaneously harried. There is no strong growth in another region to rescue the other this time.
The US still has a safe-haven attraction to many global investor. For this reason, and that increasingly US corporations will again be bringing funds home for safe keeping, mean the US dollar rally may yet be young. It is the ultimate investment hedging vehicle in the world at the moment.
The Euro, which I forecast last year would hit .9700 this year even before Ukraine, may now do even worse toward .9200 and .8800.
This is how panicked the global investment industry may become. That US dollar still looks good to me.
Market insights and analysis from Clifford Bennett, Chief Economist at ACY Securities
