Weekend press from the Wall Street Journal, this time on the potential for a US recession
Every U.S. recession since World War II has been foretold by sharp declines in industrial production, corporate profits and the stock market.
Those ill omens have aligned again.
Industrial production declined in 10 of the past 12 months ... now off nearly 2% from its peak in December 2014
Corporate profits peaked around the summer of 2014 and were off by nearly 5% as of the third quarter of last year
Stocks have fallen viciously so far this year, with the Dow Jones Industrial Average down 7.6%
But, the piece goes on:
Unlike past declines in industrial production, today's decline has been driven primarily by the collapse in the oil industry
- Output from U.S. factories has been little changed over recent months
- But mining output has fallen over 10%
- Corporate profits, too, have been weighed down by the energy industry
- Analysis from Goldman Sachs found that profit margins among the companies in the S&P 500 stock index-if energy companies are excluded-have been little changed over the past year
On the bright side, the U.S. job market is perhaps the best recession indicator of all, and it isn't flashing trouble.
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I'm going with the labour market and saying 'no' to a recession in 2016 in the US.
Its not all gonna be sunshine and lollipops. But it isn't 'we're all doomed' either.
