For These Four States, The Recession Has Arrived

Tyler Durden's picture

“The industrial environment is in a recession - I don’t care what anybody says,” Fastenal CFO Daniel Florness exclaimed in frustration back in October when William Blair analyst Ryan Merkel dared to suggest that the US economy wasn’t in fact in the doldrums on the company’s Q3 call.

No matter where you look there are signs that Marc Faber is correct to suggest that the US is already in a recession. Plunging oil prices have wreaked havoc on the country’s oil boom towns and America’s beleaguered manufacturing sector - which exists as but a shadow of its former self - is set to suffer mightily under the strong dollar. Just this morning we got a fresh warning about the the health of the manufacturing sector when US factories reported the worst business conditions in three years.

Last month we learned that in November, US freight volumes fell for the first time in three years and before that, the recession.

That’s consistent with what we’ve seen in the trucking industry, where Class 8 sales growth is in freefall, which just last week cost 1,250 people their jobs at Daimler in North Carolina. “Everybody around here's been hurting, and it's going to hurt even more,” one convenience store clerk told the local media in the wake of the layoffs.

“Over the last 30 years, the bad times last longer and the good times are shorter,” Minnesota lawmaker Tom Anzelc, whose House district includes the city of Iron Junction, which has suffered in the face of China’s acute excess capacity problem and the slump in global growth said earlier this month. “This particular time is the worst I have ever seen.”

Against this backdrop, consider that four states are already officially in a downturn: Alaska, North Dakota, West Virginia and Wyoming.

“Job gains and losses are key factors that the National Bureau of Economic Research uses to chart U.S. expansions and recessions,” Bloomberg writes. “Even as U.S. employers added 2.7 million workers in 2015, job cuts last year totaled 18,800 in North Dakota, 11,800 in West Virginia and 6,400 in Wyoming, according to the U.S. Labor Department.”

Likewise, things aren’t going so well in Louisiana, New Mexico and Oklahoma which are all at risk according to Moody’s. And then there is of course Texas, which is also struggling to cope with the Saudi war of attrition on US oil producers.

“For every 25 percent drop in oil prices, employment could be expected to decline 0.6 percent in Texas and 0.8 percent in Louisiana, while Wyoming stands to lose 2.1 percent of its jobs and North Dakota and Oklahoma about 1 percent each,” Bloomberg goes on to note, citing research by Stephen Brown, an economist at the University of Nevada, Las Vegas, and Mine Yücel, director of research at the Dallas Fed.

Amusingly, we're supposed to believe that the consumer is going to keep things afloat. "Whether the weak links break the entire U.S. economy will hinge largely on a group that’s benefited from the energy price collapse: American consumers," Bloomberg concludes. Of course as we've said too many times to count, Americans simply aren't spending their savings at the pump. If they were, you'd think GDP growth wouldn't be bumping along at a paltry 0.69% clip. 

And about all of that net job creation, don't forget this indelible chart: 

But as lower for longer continues to break the back of the US oil patch and as the soaring dollar further imperils the dying manufacturing sector, just remember, Janet Yellen doesn't think the malaise will spread. "But with respect to employment, although there really are very severe losses [in energy], it’s a pretty small sector of the work force overall.”

Dan Oxley, a West Virginia homebuilder who spoke to Bloomberg doesn't share Yellen's assessment. "Everyone is going to have to tighten their belts. The next couple of years are going to be difficult.”

Stop "peddling fiction" sir.

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moonmac's picture

Who cares? Last crash they said our world was about to end so they printed up a bunch of money and the stock market tripled. This time will be no different! RALLY ON!!!

mtl4's picture

Oh the stock market will rally alright, but it will be because there's nowhere left to put money due to toxic government debt and our war on "terrorists" using $100 bills.

BobPaulson's picture

CA must be booming. Was just in a shop today in SF and it was FULL... Of employees. I was the only customer but not one came over to help me. Also saw a shop advertising $25 shoe shine. Must be a stock broker.

ZD1's picture


California is booming with big government jobs processing welfare and other entitlements for the ever growing population of illegals and FSA.

BobPaulson's picture

But who keeps the 25 dollar shoe shine guy in business? Is he selling crack out of that joint or what? It was right downtown in Embarcadero Place. 

peddling-fiction's picture

Does he only polish the shoes?

Nutsack's picture

They better polish the knob for that price

BobPaulson's picture

there was shoe polish on sale too. I hate to imagine his rent there. 

Midas's picture

I am going out right now and spending a $100 bill just to show solidarity with the terrorists.

Arnold's picture

$100 Hamburger?$100_hamburger

$100 hamburger ("hundred-dollar hamburger") is aviation slang

(link is not working perfectly)

Artemis Rand's picture
Artemis Rand (not verified) Stroke Feb 22, 2016 5:33 PM

Meh, to each their own my friend but I would prefer to end the fed and have them all arrested.

I wouldn't fuck any of those nasty sick bastards with Hillary's dick.

Cymbal shot!

The Saint's picture
The Saint (not verified) moonmac Feb 22, 2016 2:07 PM

Let me know when they start printing again.  Until then I'm bearish.

exi1ed0ne's picture

There was a time when the Zimbabwe stock market had by far the biggest gains of any stock market in the world for the same reason.  Just sayin.

badger10's picture

Looks like to me there is more short covering to fuel this rally. Always been taught you need a leader in stocks.Also volume which is absent on these rallies.Still feel that market has topped out and caution should be used. High escalating debt doesn't give you sustainable growth. The longer this market stays up the lower we will go.

badger10's picture

Looks like to me there is more short covering to fuel this rally. Always been taught you need a leader in stocks.Also volume which is absent on these rallies.Still feel that market has topped out and caution should be used. High escalating debt doesn't give you sustainable growth. The longer this market stays up the lower we will go.

Seasmoke's picture

And the USD just continues higher and higher.

LawsofPhysics's picture

relative to what?  I'd say it has leveled off at best.

10mm's picture

Their is that word again,but missing a D.

csmith's picture

Against this backdrop, consider that four states are already officially in a downturn: Alaska, North Dakota, West Virginia and Wyoming.


Ah, Yea...genius Tyler. Less than 1.2% of the entire US population in these 4 states.

KnuckleDragger-X's picture

It's not population, but money being pulled out of the ground. Here in Texas, we've already been through this and diversified a lot. We're still in fairly decent shape except for places like Houston. We know sooner or later we'll get hammered too, but by that time, things will suck everywhere.....

Polymarkos's picture

When you are in that 1.2% and looking for work, IT REALLY SUCKS ASS.

LawsofPhysics's picture

Yes, but how many resources are pulled out of those states, that the rest of you schmucks depend on?  I love it when people in New York say "look at how great we are", right before the supply lines get shut down.  Bartertown is coming, stand together or "shelter in place"...

good luck with all those hungry SNAP babies all you city folks!

Artemis Rand's picture
Artemis Rand (not verified) csmith Feb 22, 2016 5:34 PM

That's not the fucking point. The fucking point is that these are states that are traditionally "safe" states in an economic downturn.

Now ? They suck.

Think about it in context.

Meh, nevermind.

Go feel the "bern" shit for brains.

csmith's picture

The point is that nobody lives in these supposedly "recessionary" states. It's not a recession if nobody shows up.

The Saint's picture
The Saint (not verified) Feb 22, 2016 2:02 PM

Ol' Yeller is just echoing Obama's State of the Union speech.  It must be her playbook.

2ndamendment's picture

Breaker, breaker, I'm getting broker and broker. 

Artemis Rand's picture
Artemis Rand (not verified) 2ndamendment Feb 22, 2016 5:35 PM

"You tell them sumbitches at that federal reserve that when I get my hands on them their asses are gonna be mollases!"


Polymarkos's picture

Alaska is definitely on the list. The state is 3bn in arrears on this year's bujjit alone. They have a rainy day fund of 6bn, but the low price of oil is killing things here. And, of course, the idiots running the state of Alaska cannot simply slash spending -- OH NO! Can't do that


Our skool sistim costs more than welfare here, and those two (skoolz and welfare) are the two biggest items in the bujjit. Dump 50% of the 'administrators' and poof! BIG SAVINGS. Dump all the welfare mob, and POOOF! BIGGER SAVINGS.


Simple, really.

Lostinfortwalton's picture

The city of Alexandria and the whole of Fairfax County, both hard by DC are complaining of money problems. When you consider the tax revenues from the grossly inflated house prices in both locatons they should be swimming and drowning in more money that they could ever spend. But nooooooooo, got to raise taxes. Just incredible stupidity.

de3de8's picture

No matter a depression,recession,recovery or prosperity govt, all govt, (local,state,federal) solutions are and always have been one single thing, more money.

Cruel Aid's picture

Yea thats rich.   dot gov capital hurting.... Whaaaa!


Edit: de... more taxes, they never look to organic growth

Phillyguy's picture

No Worries. The Dow is up over 200 points.

Artemis Rand's picture
Artemis Rand (not verified) Phillyguy Feb 22, 2016 5:41 PM

Life is good. Business is great. Ask me about my grandkids.

Yeah, when I see people like that I begin to think I am in a George Romero movie.

Chupacabra-322's picture

"For These 50 States, The Depression Has Arrived."

NumNutt's picture

This is off topic but is anyone else having issues with the popup  adds on this site lately? I have been a member for a while and it just seems like it has gotten bad the past couple of weeks. Starting to suck ass.

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Yep. Every time I click on an ew story a popup fails to load and I have to refresh the page to get rid of it. Been bitching about it for a while.

peddling-fiction's picture

NoScript. Free and it is a mature browser extension.

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What ads?  I use Noscript.

silverer's picture

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Artemis Rand's picture
Artemis Rand (not verified) silverer Feb 22, 2016 5:43 PM

NoScript and Ad Block also improve browser speed since it prevents all of those ads and other crap from using up bandwidth and suctioning browser speed.

Bioscale's picture

Or Ghostery, add-on for firefox. Blocks all adds and social network scum.

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adblock plus-$0/yr.  was on the verge of quitting ZH until several people mentioned it in the comments.

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But they do accept well-deserved donations. 

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I got AdBlock and am a very happy camper. Very likely, you will love it too  Now, this site is coded really heavy and sometimes freezes when I type out a comment, but not right now.

Artemis Rand's picture
Artemis Rand (not verified) Global Douche Feb 22, 2016 5:42 PM

I just wish AB would be "pioneered" for the mobile platform as well as it is for desktop applications.

silverer's picture

Mac or PC? Most browsers are geared the same internally, it's the add-ons that differ somewhat. Mac and PC both have some pretty effective stuff, if you put them in. Some work way better than others.

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Zerohedge went from ad free to Spamtopia the last few months.