"We Are In A Recession": Dallas Fed Respondents Admit The U.S. Economy Is In Freefall

Tyler Durden's picture

For those interested in hearing some horror stories from ground zero of America's recession, look no further than Texas, where the best recap of sentiment on the ground comes straight from the Dallas Fed respondents, who have not been this depressed since the Global Financial Crisis.

Here are some key examples, starting with the one that summarizes it best:

  • "We are in a recession. Oil prices are a symptom, not the cause."

Chemical Manufacturing

  • Last October we lost about 40 percent of our volume due to customer internal consolidations because of the weak economy. Most of the loss was due to product sourcing out of China. Our U.S.-based customer closed U.S. plants’ processing units and are buying from China sources, so it has no need for us to package its products for export around the globe. We have been granted new business that will come on board in March and April 2016. This will make up for some of the losses.
  • Don't know if it is the weather, uncertainty created by the presidential election, or just a slowdown in the world economy, but things are definitely slowing down. Volumes are down and new orders are quiet. Low energy prices are the saving grace keeping margins good.

Fabricated Metal Product Manufacturing

  • The refinery turnaround season has helped with new orders, but the general level of capital goods orders and prospects has decreased significantly. The summer season is the slowest, and we are expecting a very depressed market prior to the fall refinery turnaround season.
  • Our backlog has declined (50 percent less than the same time last year). We are receiving a very high volume of requests for proposals, but either are not winning them or the projects are on hold. Pricing to obtain any work has decreased for the benefit of the owner/contractor.
  • We’re seeing an uptick in trade training facilities and have been asked to accommodate intern students. We are willing to do this on a grant basis. Previously, training young people has been totally out of our pocket. The precision machining trade has been suffering for years as baby boomers have been retiring and no one is available to fill their positions. Advances in the machine trade help to compensate some, but new blood is sorely needed.
  • We are experiencing a severe downturn in our business, as the oil and gas exploration and production segment has significantly reduced their capital budgets for 2016 based on declines in the WTI price.
  • Sales bottomed out in February after weakening in January from fourth-quarter volumes. Feedback from customers indicates slower business conditions and a cautionary tightening of inventory levels. A key customer is moving additional production to China and to a large vertically integrated U.S. supplier, adversely impacting our sales after the first quarter. Additional staff reductions will be required.

Machinery Manufacturing

  • We are in a recession. Oil prices are a symptom, not the cause.
  • Our overall forecast is level; however, we should be on an increased path for volume and pressuring our manufacturing capacity. Due to the low price of oil, there is a direct impact on the overall forecast of increased sales and manufacturing. Other segments of industries such as aerospace and general manufacturing seem static. The end result is we believe the economy overall is not positive.
  • Low commodity prices within the energy industry are brutal. Further rounds of headcount reductions are being planned now after multiple waves of reductions in 2015. Trying to plan cash flow in this environment is nearly impossible, as producers continue to cut activity and demand steeper and steeper discounts on products and services. Failure rate of companies in the energy industry will start to ramp up materially in 2016.
  • Customers are becoming more cautious about investing in expansion than they were this time a year ago.
  • There is continued weakness in oil- and gas-related equipment manufacturing. We anticipate improvement in the second half of the year, but no change in wages.
  • It's a tough time in the oil patch. We plan on cutting 20 percent of staff this month after cutting 25 percent a year ago. We are not sure how we can sustain our skill sets with these dramatic troughs.

Transportation Equipment Manufacturing

  • Our business is heavily tied to the health of the Texas economy. Depending on the fallout from the energy sector, our six-month projections may turn negative. If we are able to quickly move into an emerging market, even if the broader Texas outlook turns negative, this may act as a mitigating factor for our business. The coming year does represent the least confidence we've had in knowing where conditions were heading since 2010.
  • Our business is seasonal, and we generally see an uptick in the spring. With the relatively mild winter this year we may be seeing the spring uptick early. So we remain cautious about our usual spring surge.

Printing and Related Support Activities

  • We made heavy investments in new equipment and new capabilities over the last three years, and finally the nationwide salesforce is feeding this plant new business opportunities at a rate I've not seen in my 10 years here. Plus our largest customer went out to bid for the umpteenth time and for the first time, all of the competitors raised prices, and a bunch of business came back our way. I am more optimistic about the future for this plant than I've been in a while.
  • Qualified candidates for machine operator positions are very difficult to fill. The lack of workers is limiting production in this manufacturing business.
  • We cannot figure out why it is so slow right now, other than we are indirectly impacted by the downturn in energy. We are four months into our fiscal year and are behind 21 percent compared with last year on incoming orders, and last fiscal year was a down year!

Source: Dallas Fed

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TeamDepends's picture

Who's peddling what now?

Dr. Engali's picture

I taught my daughter how to peddle her bike yesterday.

Keyser's picture

A full-blown recession should be good for S&P 2200 by Q3 given the current sentiment, bad news means helicopter drops of $$$ on wall street... 

MalteseFalcon's picture

Market crash in September, unless it looks like a Trump win.

Then market crash in March 2017.


Ghost of Porky's picture

Or, if Little Marco is elected - Make America Bate Again.

idea_hamster's picture

"Printing and Related Support Activities

  • We made heavy investments in new equipment and new capabilities over the last three years, and finally the nationwide salesforce is feeding this plant new business opportunities at a rate I've not seen in my 10 years here. "

Uh...was that QE printing by the Fed?  

Stainless Steel Rat's picture
Stainless Steel Rat (not verified) MalteseFalcon Feb 29, 2016 11:32 AM

I am surprised that the World Bank and IMF haven't chimed in about Trump yet.

IndyPat's picture

If we could get a Corzine endorsement for Kanks, it may turn on a light bulb for some. Although the Goldman payola spent to "rent" the Hilldabest hasn't really effected her core or near orbit supporters.

vq1's picture

"we are in a recession"

Can someone please post the link to the original quote from dallas fed? Ive searched and I cant seem to find it. 



This is the quote from the link in the article. 

"The new orders index fell 8 points to -17.6, reaching its lowest level since May 2009, when Texas was in recession."

j0nx's picture

Wish someone would tell this to housing because it sure as shit didn't get the collapse memo. Prices are going nowhere but steadily up and inventory is low to non-existent here in the No. Virginia area.

Dr. Engali's picture

No, we're in a depression and it's getting worse.

CheapBastard's picture

It's not a depression. It's the "Change you can believe in" economy.

TeamDepends's picture

Brother, I HOPE you can spare some CHANGE!

hcho3's picture

Page central banks now!

Dexter Morgan's picture

Even the place where I deliver pizzas is down.

Lady Jessica's picture

"But that just can't be." - Perplexed PhD economist ensconced in ivory tower.

Keyser's picture

You should use the Bene Gesserit voice on them, or perhaps you already have at the behest of the Guild... The spice must flow... 

NoDebt's picture

Of all the things they will say in the future, that's, unfortunately, not one of them.  When this next recession (within the larger overall depression) hits WHILE CBs STILL HAVE THEIR FOOT BURIED IN THE GAS PEDAL, there will be only one possible official response.  To deny that it's happening.  

If admitting a mistake is almost an impossibility, admitting quandry is is 1000X more impossible.  It would be like hanging out a big sign that says "Nobody here knows what the hell they're doing.  You can panic now."

ThroxxOfVron's picture

"It would be like hanging out a big sign that says "Nobody here knows what the hell they're doing.  You can panic now."  "


Pretty much sums up the last 8 years or so.

...& that message is much prefered over the more accurate:

"We know exactly what we are doing and always have.  We are harvesting your productivity, ingenuity, sweat, your personal information, children, bodily organs and fluids; -whatever you have that we can imagine to exploit is being dumped into the human life grinder so we 1% can consume your sweet human flesh as hors d'oeuvres.

NoDebt's picture

Well, thank God SOMEBODY'S in charge, at least.

E.F. Mutton's picture

Meanwhile, President Barry tunes up his fiddle, sticks his fingers in ears, eyes closed, shouting "La la la I'm not hearing this, la la la"


CheapBastard's picture

The future of American shopping malls is looking increasingly bleak



American malls might be doomed.

Anchor stores like Macy's, Sears, and JCPenney have been closing stores.

When these huge stores close, it can kill traffic for the entire shopping mall and lead to the entire center's demise over time. 

And that's just on top of the already dire state of American malls.

In 2015, Fortune reported that around 300 malls could close in the following decade, citing Green Street Advisors.




I suggest we turn malls into prisons; simply put an 8 foot cyclone razor wire fence around them since many malls are already occupied by aggressive violent thugs anxiously awaiting for the next buyer to walk out the store with his Air Jordans.


Allen_H's picture

I had a read, but I have read a few articles similar to this. Just one thing though, don't you have enough prisons already ?

TheReplacement's picture

Gonna need a lot more for all the politicians and bankers before this is all over.

Grouchy-Bear's picture

But we have to have a place to hide from the Zombies! They (mall fortresses against the evils of life) make the best Hollywood movies and without malls, we have no more good movies...

cheech_wizard's picture

2 men enter, 1 man leaves.

Mall-dome, coming to PPV in 2017.

Standard Disclaimer: Or one helluva paintball park.

gaoptimize's picture

"A key customer is moving additional production to China and to a large vertically integrated U.S. supplier, adversely impacting our sales after the first quarter. Additional staff reductions will be required."

Plays into Trump's message on trade and outsourcing.  Maybe an interesting night in Texas, tonight,  Super Tuesday

ThroxxOfVron's picture

"Qualified candidates for machine operator positions are very difficult to fill. The lack of workers is limiting production in this manufacturing business."



We offer total shit wages and zero job security but expect a fully competent energetic young workhorse to accept whatever we offer and resign themselves to drugery for peanuts while the top suits rack in big bux.  

Or, we could scream for more Mexicans 'cause they will take the shit gig along with the fat IRS EIC check for half a dozen dependents south of the border that never have to be verified or produced for the Govvy checks to get cut.

Allen_H's picture

All going to plan for the golfer in chief.

LawsofPhysics's picture

Interesting, that is not what all the government indicators or the "market" is saying!!!!

Are you suggesting that somebody is lying?  You mean to tell me that bailing out all those useless paper-pushers in the banking/finance sector and enriching the political class di not work after all?

Okay fine, time for a serious refund or serious retribution!!!!!

Seasmoke's picture

Yes. But how are things in Israel ???

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Seasmoke Feb 29, 2016 11:10 AM

Stop looking behind the curtain and watch the screen!

Dragon HAwk's picture

a recession here a recession there pretty soon you  find out you actually have a depression.

  unless of course you work for the Government then everything is Rosy

youngman's picture

What is amazing is how much all the Central banks have printed and all that money has to repaid somehow....they thought with a growing economy because of all the new fiats ....not in the future now.....so what are they saying is their exit....probably do not think about it now...its more like..how much did China print...well we need to do the same...

Keyser's picture

Repaid? Perhaps with hydrogen bombs... 

Vlad the Inhaler's picture

"We cannot figure out why it's so slow right now". Because people are broke, thanks to the corporatists and their crony politicians. You can make all the stuff you want, but if the working man isn't taking home enough pay, you won't sell it.

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Feb 29, 2016 11:12 AM

Best way to solve a recession is push housing prices up another 10%, who needs to be able to afford a home and think of all the taxes you'll pull in with the real estate revaluation. 

Tachyon5321's picture

Maybe Krugman can jump into the big hole he dug with the taxpayers money...

DeepFriedLizards's picture

Everything is pointing to a crash, maybe before fall.  TPTB have either lost control or don't give a fuck anymore.  They can keep trying to squeeze blood from a rock.  I hope they're psycho enough to keep trying so that we have a chance to lay hands on them.


Crash this shit show and lets move on you fuckers, you can try and come back in a five or ten years and hope we don't catch your ass. 

SillySalesmanQuestion's picture

"Hard to find, qualified machine operators, is limiting production..."

Not surprising. I had found this to be a problem for most of my clients in manufacturing for the last ten years and I see it has only gotten worse.

Sorry_about_Dresden's picture

Is it any wonder as corporate America has fired HR staff to show productivity gains while they now rely heavily on software to take applications?

I have applied for so many positions and come to find out my resume isn't even being read by a human but, is being screened by an algorithm. I have to rewrite my resume for every position I apply for to include the key words in the job description. I keep seeing the same position advertised again, and again, and I finally wrote to an HR department, of a Fortune 100 company, and asked them why I haven't been contacted. I wrote: "Is it because of my race?", just to get a response, which I did, I got a phone call within a few days and I was double talked for 10 minutes while the guy denied that the same position had been repeated advertised over almost 2 years.

"Hard to find, qualified machine operators, is limiting production..."

I could put out one ad for an operator, costing zero dollars, and I guarantee I would have 50 resumes within a week with 5 of those actually meeting all qualifications.   

I was a resource manager for a mechanical construction company out of Rochester, NY. They won a $25 million contract, before change orders, and it was the easiest job finding qualified people to fill positions when the project started up.

I worked very closely with the Superintendent and Foremen to weed through the candidates so they could concentrate on planning. I even administered the piss test and handled the HaSP and Davis-Bacon reporting. It was a good gig but, the commute was 1000 miles a week and I took a job closer to home after about a year. 

I had people from all over the country contacting me and I even worked w/ the local trade school and DoL to start the apprenticeship program which turned out to be 25% of our workforce.

HR departments don't do anything! I did it for my company and it was easy. The Super' finally told me to ease up cause he had plenty of people and didn't want to speak w/ anymore applicants unless they were Columbian. He loved the Columbians, they were the best workers. Nicest too!

Whomever wrote that tripe to the Dallas Feral Reserve is a lying sack o' chit. Trying to perpetuate the full employment lie!

Soul Glow's picture

Dallas Fed admits recession, tells banks to hide their NPLs.

Chuckster's picture

I still want to bask in your shadow.  When is the meltdown coming?  A five hour window would be perfect.

Thru the years they have been told several times to hide their NPLs.

Soul Glow's picture

In July I said there would be a stock market crash in August and September, followed by a bounce in October and November, with a top occuring before Christmas, and then a resume of the crash happening during the winter.

In January I outlined exactly how and when the collapse would happen.  With the stock market collapsing in March, having a bank holliday and subsequent dollar devaluation in April, followed by a bond crash in May.  At which point in the summer everything goes to shit and the whole system is revalued to gold, with gold moving to the $5k - $10k range and silver having a similar leap but with a higher percentage.

Two weeks ago I gave an exact date for the first day of the collapse - March 21st - a day that would see a 10% down move, followed by a Tuesday, the 22nd, with what will likely be a 20% down move, followed on the 23rd with another 10% down move, at which point the exchanges will be halted and the banks closed.

Bix Weir was on Greg Hunter this weekend and basically is on my train.  I have heard others on my train as well.  I have outlined it since July whereas others have only been making predictions lately.

Chuckster's picture

Surge = Bush(George W.).  I never smelled a bush that didn't stink!

zipit's picture

They exist, my friend.

Gohigher's picture

Iceland moment opportunity in 5,4,3,2,......