President Donald Trump wasted little time in finding someone to blame for the dismal factory activity.
The president continued to blow up his hand-picked Fed chief, calling the central bank "pathetic."
Trump's blame-the-Fed narrative is not supported by the evidence.
Many of them complain about something else: the US-China trade war.
"Customs has caused a lot of confusion in the industry," said a manufacturer of electrical equipment, appliances and components.
An executive food, drink and tobacco product said: "Chinese tariffs going up are hurting our business. Most of the materials are not made in the United States and are only made in China."
Blaming the Fed is & # 39; completely wrong & # 39;
Not surprisingly, economists and market analysts pinned most of the blame for the trade war, and not the Fed.
"We have now settled into a production recession in the United States and globally," wrote Peter Boockvar, chief of investment managers at Bleakely Advisory Group, in a note to clients on Tuesday.
"What's the ultimate cause of all this? It's the trade war," Ethan Harris, head of Bank of America's global economy, told CNN Business. "The whole story of the Fed being too slow is completely wrong. The Fed has never moved faster."
The ISM report provides strong evidence of the fallout of the trade war. Not only did production deepen further into the contraction area in September, but it was the weakest month since June 2009, the last month of the Great Recession.
Fifteen manufacturing industries were entered into in September, including clothing, leather and allied products, printing and associated support activities and wood products. New export orders, a trade-sensitive part of the report, had their weakest reading since March 2009.
That is not to say that there are no justified gripes on China's trade policy. Business executives have long complained about intellectual property theft and non-tariff barriers they say are doing real harm to US companies. But the trade war is clearly hurting the economy.
US manufacturers are also inundated by the global economic downturn. The major economies including China, India, South Korea and Germany have stumbled in recent quarters. The global slowdown is compounded by the trade war.
"It's all a vicious circle," said Alec Young, CEO of Global Market Research at FTSE Russell.
Strong dollars don't help. But that's not the main problem
Trump is right to say that the dollar is strong. The US dollar index, which measures dollars against a basket of currencies, has not been as high since spring 2017.
But even though a strong dollar is great for Americans traveling abroad, it makes it harder for American companies to export the goods their. Everything from iPhones, tractors and cars becomes more expensive for foreign buyers. And then multinational companies are kind when they turn their foreign sales back to dollars.
"The strong dollar is headwind. But it's not the end of the world," Young said.
Trump claimed that the Fed deserved that blame for the strong dollar because America has higher interest rates than many other major economies.
But Bank of America's Harris said that it is the trade war, not the Fed, that is causing the dollar's strength. Nervous over the global economic downturn and trade policy, investors are dumping foreign currency in favor of the greenback.
"The Fed is what really helped to curb the war on battles. They have prevented the dollar from being even stronger," Harris said.
Interest rate cuts are a dull tool. Cheaper borrowing costs help interest-sensitive sectors, such as housing and cars. But capital costs are already near record lows. A discount on borrowing costs will not do much to clear up the uncertainty and supply chain destruction of the trade war.
"The only reason anyone cares about the Fed is because we can't get a trade. The Fed is an insurance policy," Young told FTSE Russell. "What Wall Street wants is an end to the tariffs."
Can households continue to grow?
Recent history shows that the United States can avoid a recession, even when the ISM production index lowers the contraction area. It happened several times in the 1990s, as well as in 2003, 2012, 2013 and 2016, according to the Bespoke Investment Group. This is because production is only a small part of the modern economy.
Consumption spending, which runs around two-thirds of the economy, is still solid because unemployment is low, confidence is strong and US equities are trading near record highs.  The hope is that consumers will continue to propose things, expanding the longest economic expansion in American history.
And it is still possible that Washington and Beijing, fearing economic problems, will finally come to an agreement to avert a new round of tariffs that will hurt growth. A trade agreement, especially one that rolls back existing tariffs, would increase confidence among CEOs and households.
But Some "cracks" are beginning to show up in consumer spending, according to Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.
In a report to clients, she noted that employment has slowed, personal expenses were reduced in September, and consumer confidence in job availability declined.
The risk is that the consumer image may darken before a trade agreement can be reached.
"If consumer confidence falls seriously," Ian Shepherdson, chief economist at Pantheon Macroeconomics wrote on Tuesday, "the United States could tap into the first recession ever caused directly by the president's actions, instead of the tight monetary policy action of an overly private sector. "
Or, as Bleakley Advisory Group's Boockvar put it," using tariffs as the tool to push back against China was a really dumb idea and history will not look well at the strategy. " No wonder the White house shifts blame on Fed.