The Recession Isn't A Few Months Away... It’s Already Started

Tyler Durden's picture

Submitted by Harry Dent via EconomyandMarkets.com,

So the S&P 500 is out of correction for now and the coast is clear. NOT! This is exactly what we’ve been predicting would happen – after reaching new lows, stocks would have to bounce before they inevitably resume their longer-term trend, which is down.

But stocks haven’t been the only victims of late. Just a couple weeks ago the January nonfarm payroll report came in at 151,000 jobs. So much for the expected 190,000! And of the ones reported, they were mostly low-wage jobs.

Pile that on top of the disappointing Christmas and retail sales in December. Not to mention falling stock earnings and sales growth, the worst December-to-January stock performance to date, and another banking crisis looming in Europe, especially Italy. There’s economic weakness everywhere you look!

All of this is leading me to believe that the next recession – which will lead into an even greater DEPRESSION – is not a few months away. I think it’s already begun.

Think back to the Great Recession in 2008. By the time we figured out it had started, it was months after the fact. It officially started in January 2008, three months after the stock market peaked in early October. And jobs didn’t peak and start to decline until four months later that May. Only then did the stock market see its sharp and deep crash between June and early November.

Well, of course it did! The jobs report is a lagging indicator! It doesn’t tell us anything about where we are now, which is probably why the Fed and markets-on-crack love it. Yet they think it’s the most important report that comes out. Go figure. (By the way, real estate is another lagging indicator, and Lance will have more on that for you tomorrow to tell you where we’ve been, and to give you an idea of where we’re going.)

David Stockman recently pointed out a better indicator for jobs that his colleague Lee Adler tracks.

Unlike the nonfarm payrolls report, where there’s a lot of room to fudge the numbers, this other indicator is in real time and goes right to the source: payroll! Specifically, payroll taxes that the IRS withholds from businesses.

It’s pretty obvious that if the IRS is withholding fewer payroll taxes, then there aren’t as many people on payroll. As it turns out, the trend in monthly data has been clearly downward since 2011. And the last two months are worse. Lee Adler’s daily data shows that jobs flattened in December and declined 5% in January.

Given that this is in real time, sounds like we’re already in a recession!

But let’s take a look at another indicator that shows we’re already there. This one most surprised me: the Restaurant Performance Index. What sector would you expect to benefit more from freed-up spending thanks to lower oil prices? But look where it is today:

Restaurants Suffer a Sharp Drop Just Like in Late 2007

By falling below the 100-level line, restaurants are officially in a period of contraction. The index fell to a negative reading of 99.7 in December from 101.3 in November. That’s a 1.6% drop in a month! We haven’t seen a drop this steep since late 2007!

It gets really ugly when you start digging into the index. Among the eight indicators that make it up, the December decline occurred in all of them.

For example, 73% of restaurants reported higher same-store sales in July. As of December, only 42% of them do. Ouch.

And whereas only 13% of restaurants were reporting lower same-store sales in April, now it’s 43% – more than the 42% on higher same-store sales I just mentioned. Sure, it’s higher by just a percent, but still, that’s a pivotal shift in momentum!

Digging deeper, 33% of restaurants reported higher customer traffic, but 51% reported a decline. And a quarter of them see worsening economic conditions in the next six months. Only 12% see better.

That likely points to a key tipping point in December. All of which suggests that a recession either started in that month or January.

Of course, most of the economists or analysts in bubble land aren’t seeing this. I can’t say none of them because a few are finally starting to wake up!

After stocks broke below the support level at 1,820 on the S&P 500, we were bound to get another bounce. But a much sharper and larger crash is growing very likely between sometime next month and July – and that won’t be the end of it.

We are not out of the woods yet. And we’re in for a lot of volatility ahead, so don’t expect things to settle down anytime soon.

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Last of the Middle Class's picture

Print some mo, ho!  Recession. . . . bwahaaaaaaa I nearly spit coffee on that one.

 

Durrmockracy's picture

People give muh shit over teh use of 'teh'?  What is this 'recession' crap I keep hearing?  D... D... D... it's a 'Depression' you mooks!

Consuelo's picture

"...you mooks"

???

 

'Headbanger'...?

 

 

Sages wife's picture

Clever Consuelo. He's gone rogue. He had to change his name after the FED hike.

VWAndy's picture

 How did it ever get the title The Great Depression?  Im pretty sure a banker thought that line up.

KesselRunin12Parsecs's picture
KesselRunin12Parsecs (not verified) VWAndy Feb 21, 2016 12:58 PM

No... It was a PHARMA exec...

VWAndy's picture

 Fuckin cokeheads. You might be right.

Arnold's picture

+ /-  Aldous Huxley

 

"Addendum: I’m not clear on when “The Great Depression” became officially known as “The Great Depression,” or even just a “depression.” In 1930, the economist John Maynard Keynes famously referred to it as “The Great Slump of 1930,” so it’s a wonder that label didn’t stick. The Oxford English Dictionary’s quotations section for the entry on the term “depression” includes the following chronology:

1934 A. HUXLEY Beyond Mexique Bay 233 Since the depression, books on Mexico have been almost as numerous..as books on Russia. 1935 ‘J. GUTHRIE’ Little Country xiii. 212 ‘I thought you had a baby.’ ‘No, darling,’ said Carol. ‘None of us are having them now. It’s the depression.’ 1935 Punch 19 June 719/1 All the wireless sets in Little Wobbly are pre-depression models. 1957 M. SHARP Eye of Love iii. 39 It was the Depression that had finished him off."

 

http://economix.blogs.nytimes.com/2009/03/11/great-recession-a-brief-ety...

Father Thyme's picture
Father Thyme (not verified) Feb 21, 2016 12:26 PM

Harry Dent has publicly stated that gold will fall to $250-$400.
www.caseyresearch.com/articles/dear-harry-dent-wanna-bet

Haraklus's picture

If there is a sufficient credit crisis, and liquidity dries up, any low on any asset is plausible.  The question is what happens after.  

If the Fed intervenes and pumps the economy full of money again, then all assets will also soar afterwards, and last time gold was one of the first ones to do so.

If the Fed doesn't intervene, and there is a massive wave of defaults, the economy is going to be fucked, and it could go either way, massive inflation or deflation.

 

The big payoffs for gold, really, are normalization of QE and Nirp, and currency abandonment.  Either one will result in gold having been a killer investment relative to other options.

Cautiously Pessimistic's picture

Man....I only hope he is at least half right on that.  The only problem though...there won't be an ounce to be had at that price most likely.  But, hey, we can all dream, right??

GotGalt's picture

I think you are right, sadly.  If gold spot falls to $250, I think the premium for 'non tribe' folks will be at least $500 or more.  I reckon $800 - $900 would be the time premiums really start skyrocketing.  Buy at $800, $100 premium.  Buy at $700, $180 premium.  Buy at $600, $250 premium and so on...

Colonel Klink's picture

Well he's aptly named as Hairy Dent.

Joe Cool's picture

Depression, recession, inflation, deflation, disinflation, hyperinflation, stagnation, stagflation...

It's all happening at once...

MSimon's picture

So odds are we will be in full crash mode by election time. Interesting.

Dead Canary's picture

Yeaaa..... Won't that be innersting!

posishinuvignurinse's picture

My Grandmother would not consider these times as living through a "Great Depression". It's the new, lower-standard-of-living, middle class sans manufacturing, "Normal".

 

 

Bastiat's picture

SNAP & SS Disability: the full-fiat digital breadline--without that grandma would see just what's going on.

FreedomGuy's picture

What happens when 100% of the people are in line waiting for bread and no one is making it? In the collectivist mind everyone can be on assistance and no one need give any.

hound dog vigilante's picture

Great point. 

If 50mil americans had to physically queue-up for their freebies, we'd ALL take notice... it's been going on for 8+ years now.

And I'll bet the 'unemployment rate' as calculated in the 1930's included the long-term unemployed, unlike today.

 

EBT/stripmall america is a facade that hides widespread regression, economic and otherwise.

cynicalskeptic's picture

Unemployment in 1932 was 23.8%

It's around 24% today going by Shadowstats.com who are calculating it using 1980 metrics.

Go to any food bank and you'll see how bad it is.  We're worse off now than in the 1930's because fewer people are on farms - close to the food supply - and fewer people have ever actually had to work hard (ever) and don't know how to do so.  In the 1930's you had accountants and professors diggin ditches (willingly) to earn money.  Think that'll happen today?

hxc's picture

A post befitting of your username

pilager's picture

On a very serious note, business modules for my firm/ industry shows massive slowdown being realized and trending across all spectrums of supply chain. Only sector up, inventory.

Winston Churchill's picture

Seeing the same,almost like a spigot got turned off at new year.

I had the same last Jan. & Feb. but my year turned around.

This looks far more widespread from talking to customers and suppliers.

franzpick's picture

The world collapse has been here since Sep. '15, hiding in plain sight, in the declines in exports - S. Korea Aug. down 17% for example, later India minus 25%. Huge declines, unreported or under-reported. Has someone done a summary? I'm looking for another INDU 1000 point down day - soon. But then, everyone resists reality, until the bear fatally claws the first camper in the investment tent.

Thunderbox's picture

I'd keep playing. I don't think the heavy stuff's gonna come down for quite awhile.

StormShadow's picture

Awesome. So many great lines in that one.

HiHoAg's picture

Carl!!! I want you to kill every golfer on the course!!!

starman's picture

No worries 15 bucks an hour will fix that!

Won't be needing no performance charts! 

tricorn teacup's picture

If that was sarcasm, +1

If serious you need a cluebat upside the head.

buzzsaw99's picture

it's been rough for restaurants ever since christie had that surgery.

StormShadow's picture

I remember watching a comedian tell him "Hey, it's the Garden State, not the Olive Garden State" LOL

44magnum's picture

The

Recession

never went away just because our lying piece of shit federal government has been telling us it has don't make it so. The FUCKERS never ever ever tell the truth about anything! Period!

pilager's picture

Cheaper pussy [{}]. :))

abyssinian's picture

But why are they hiring so many waiters if restaurantes are not busy? 

FreedomGuy's picture

Because Obamacare broke one job into two to stay under 30 hours.

FreedomGuy's picture

The question is also how many of the bartenders, waiters and baristas have college degrees awaitig a real job.

Infield_Fly's picture
Infield_Fly (not verified) Feb 21, 2016 1:17 PM

Recession??  Really??

 

More like Full-Retard-ession.  Labor Part Rate?  Food Stamp Head Count?  Inventory Build?  Share buybacks at ATH's?  Commodities index at 1976 levels - headed toward 1957 levels?  We're fucked, but the MSM pumped the necessary sunshine, so all is fine.

 

We've been in a depression since 2007 - it's just some fucking cocksucker named Barack ordered yellen to keep markets up so this piece of shit could spew upside-speak.

 

China's collapse is going to be the biggest disaster event in the history of the human race - unwind is the unstatement of the millenium.

adanata's picture

Infield....obummer ain't calling the shots. He gets his call from Basel every morning before his first cuppa joe...

Raffie's picture

I got a ton of people telling me I don't have a clue and "just watch" becasuse the markets will bounce back and the world will be business as usual.

I still try to let people know what is going on because if I only wake up ONE person from the American Dream, then it will be worth it for me.

Winston Churchill's picture

Time to start hiding in plain sight.

SHTF is now too close, don't make yourself a target.

StormShadow's picture

A noble effort, but a very frustrating one. Be prepared to be "wrong" for a very long time until you're finally proven correct. At which time it will have become pointless and a Pyrrhic victory. In the meantime your friends and family will think you're nuts. Been there done that.

pilager's picture

Yes, they do... Look at you (me/we/us) as nuts....

I was trying to buy some alligators for my mote out front... PETA liked the idea, municipal did not.

Forward with your belief gentlemen...

HiHoAg's picture

<The Donald will save the world!

<The Donald is as full of suit as the next guy.

Infield_Fly's picture
Infield_Fly (not verified) HiHoAg Feb 21, 2016 1:35 PM

The Donald is not part of the shitbag single party system - that's why the GOP is shitting themselves silly.

Shad_ow's picture

Donald is the outsider who bought and paid for the insiders.

There is no excuse for the ignorance of those who are falling for his act.

FreeShitter's picture

The donald maybe an outsider, but if he's the chosen one, he will be shown the reminder tape of JFK. The donald will never audit the fed anyways.

adanata's picture

FS... The Fed was created to gain control of the U.S. gov while confiscating the wealth of 'mericans. Mission Accomplished. The IRS is a collection agency; the enforcement arm of the Fed. They have now outlived their usefulness ... How will TPTB make hay outta this? Tell the sheeple the Fed is gone and the IRS replaced with a flat tax. The sheeple will believe this is a great victory. The banker's political rep who gets "credit" for taking down the Fed will be hailed by the sheeple as a "great leader".... and the band plays on I reckon...

BSHJ's picture

I am just glad that prices on large flat-screen TVs are coming down......Dancing With the Stars and American Idol look so much better on those huge screens.