The U.S. economy ends 2018 with a thud
The U.S. economy finished 2018 with a thud
A series of surveys about U.S. economic activity in December disappointed, capping the stock market's worst year since the crisis on a downbeat note
<p class = "canvas-atom canvas-text Mb (1[ads1].0em) Mb (0) – sm Mt (0.8em ) – sm "type =" text "content =" Last month, manufacturing surveys from the & nbsp; New York & nbsp; Philadelphia Richmond, and Dallas Federal Reserve banks have all disappointed, while The Conference Board's reading on consumer confidence in December also missed expectations. " data-response time = "13"> Last month, manufacturing surveys from the New York, Philadelphia, Richmond, and Dallas Federal Reserve banks have all been disappointed, while The Conference Board's read on consumer confidence in December also missed expectations.
And while 2018 is shaping up to be the best year for GDP growth in the US in decade, final economic reports of the year indicate the stock market has been counting investors over the last month – 2019 will be worse for the economy.
<p class = "canvas-atom canvas-text Mb (1.0 em) Mb (0) – sm Mt (0.8em) – sm "type =" text "content =" Historically bad survey results "data-response time =" 15 "> Historically bad survey results
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "On December 26, the & nbsp ; Richmond Fed's manufacturing reading & nbsp; for December dropped into negative figures for the first time since 2016. The index fell to -8 in December from 14 in November, the largest month-in-month decline in the history of the survey and the biggest miss relative to expectations since at least 2005, according to & nbsp; Bespoke Investment Group Readings in positive territory indicate more respondents see economic activity increasing; s mean a larger percentage of respondents saw and decrease from the prior month. " data response time = "16"> On December 26, the Richmond Fed's manufacturing reading for December dropped to negative figures for the first time since 2016. The index fell to -8 in December from 14 in November, the largest month-on-month decline in the history of the survey and the biggest miss relative to expectations since at least 2005, according to Bespoke Investment Group. Readings in positive territory indicate more respondents see economic activity increasing; negative readings mean a larger percentage of respondents saw a decrease from the prior month.
Notably, the new shipment index for the Richmond Fed's report was at its lowest level since April 2009 in December while the index for local business conditions registered its lowest reading on record at -25.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " On December 27, the Conference Board's consumer confidence index & nbsp; for December hit a six-month low and the 8.3-point drop in the headline reading from November was the largest month-on-month decline in three The report's gauge on consumer expectations for the economy also fell sharply in December hitting a two-year low and indicating that consumers have appeared broadly insulated from the economic concerns being expressed in financial markets, some spillover may be occurring. " data-response time = "18"> On December 27, The Conference Board's consumer confidence index for December hit and six-month low and the 8.3-point drop in the headline reading from November was the largest month-on-month decline in three years . The report's gauge on consumer expectations for the economy also fell sharply in December, hitting a two-year low and indicating that though consumers have appeared broadly insulated from the economic concerns being expressed in financial markets, some of which may occur. – In this June 5, 2018, a photo can be seen through a roll of steel at the Borusan Mannesmann Pipe manufacturing facility in Baytown, Texas. Ditching decades or U.S. trade policy that she says swindled America and robbed its workers, jobs and factories by abandoning or rewriting trade deals, slapping taxes on imports and waging a brutal tariff with China, America's biggest trading partner. Separately, Trump has allies like Canada and the European Union by declaring their steel and aluminum a threat to America's national security as justification for slapping taxes on them. (AP Photo / David J. Phillip, File) ” class=”JsEnabled_Op(0) JsEnabled_Bg(n) Trsdu(.42s) Bgr(nr) Bgz(cv) StretchedBox W(100%) H(100%) ie-7_H(a)” itemprop=”url” style=”background-image:url(https://s.yimg.com/ny/api/res/1.2/hbvJNEcCfYdGpbREMC4vZw–~A/YXBwaWQ9aGlnaGxhbmRlcjtzbT0xO3c9ODAwO2lsPXBsYW5l/https://img.huffingtonpost.com/asset/5c2a551b260000a60584fae0.jpg);” src=”https://s.yimg.com/g/images/spaceball.gif” data-reactid=”23″/>
"While consumers are ending in 2018 on a strong note, back-to-back declines in Expectations are reflective of an increasing concern that the pace of economic growth will begin moderating in the first half of 2019, ”said Lynn Franco, senior director of economic indicators at The Conference Board.
<p class =" canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt ( 0.8em) – sm "type =" text "content =" On Monday, the & nbsp; Dallas Fed's reading on business activity in December & nbsp; plunged to -5.1, a sharp drop from November's reading of 17.6 The Dallas Fed's lowest overall reading since the crisis was the lowest overall reading for the Dallas Fed report since the middle of 2016, while the overall company outlook also hit a two-and-a-half year low. the price of oil, which has dropped over 10% in December and is down over 30% since October. " data response time = "31"> And on Monday, the Dallas Fed's reading on business activity in December plunged to -5.1, a sharp drop from November's reading of 17.6 and the biggest monthly drop since the crisis. This was the lowest overall reading for the Dallas Fed's report since the middle of 2016, while the overall company outlook also hit a two-and-a-half year low. The Dallas Fed's reading often follows the price of oil, which has dropped over 10% in December and is down over 30% since October.
One business respondent to the Dallas Fed's survey pointed to the housing market as a sign of stress, saying, "Housing is definitely seeing an impact from various variables such as interest rates, tariffs and a tight labor market in construction." Another contact added, "We are experiencing rising expenses throughout the supply chain … We face great uncertainty for the near future. The economic policies of President Trump are causing unnecessarily volatile pricing and unpredictable outcomes. ”
<p class =" canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm "type =" text "content =" The market already priced it in? "data-reactid =" 33 "> Has the market already priced it?
On Thursday, the closely watched Institute for Supply Management's reading on manufacturing activity in December will be released, with expectations that this reading should continue to show expanding activity in the sector.
Neil Dutta, an economist at Renaissance Macro, said last week that his model for the ISM data has been running above forecast for the last 18 months. The decline in the stock market and the rally in Treasury yields – both indicating a defensiveness among investors and a downgraded view of the real economy – suggest and drop in this data could be coming.
In other words, the market has been pricing in the exact data from the business sector that we have started to see in recent weeks. Further market declines on mediocre data would take data that is worse than just mediocre.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – cm "type =" text "content =" Downbeat survey data from the business sector is in contrast to data about consumers that shows spending remained solid through the holiday season. Data from Mastercard Spending Pulse & nbsp; showed a 5.1% increase in spending & nbsp; from November 1 through Christmas Eve with data from the NRF showing annual gains of between 4% -5% for the holiday period. " data response time = "42"> Downbeat survey data from the business sector is in contrast to data about consumers that shows spending time through the holiday season. Data from Mastercard Spending Pulse showed a 5.1% increase in spending from November 1 through Christmas Eve with data from the NRF showing annual gains of between 4% -5% for the holiday period.
<p class = "canvas-atom canvas -text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm "type =" text "content =" Financial markets are not interested in what is happening or now or has taken place in the recent past Since November 1, the XRT ETF that tracks the retail sector has lost more than 15%, Shares of Target ( TGT ) are down over 20% in that period, while Kohl's ( KSS ) has dropped 15%, and Walmart ( WMT ) is down 9%. " data-response time = "43"> Financial markets are not interested in what is happening or now or has taken place in the recent past, but what the future holds. Since November 1, the XRT ETF that tracks the retail sector has lost more than 15%. Shares of Target (TGT) are down over 20% in that period, while Kohl's (KSS) has dropped 15%, and Walmart (WMT) is down 9%.
Investors are looking past data on consumer spending during the holidays and bracing for leaner times ahead.
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<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) –sm Mt (0.8em) – sm "type =" text "content =" Myles International is a writer at Yahoo Finance Follow him on Twitter @MylesUdland "data-response =" 46 "> Myles International is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
