At 10AM today the casino got more bad news when the ISM services index for September came in well below expectations, but, more importantly, confirmed the US economy is indeed slouching toward stall speed–with recession not far behind.
To be sure, we don’t think you should bet the farm on these sentiment surveys because they involve a pretty substantial feedback loop in our stock market obsessed corporate C-suites. That is, if share prices and stock options are marching steadily higher, corporate beer goggles tend to read-in an extra dose of optimism about current and expected business conditions, and vice versa when the stock averages have been slumping for a sustained while.
Still, it’s pretty hard not to see in the monthly ISM-services readings shown in the chart below the generic slowing trend which is coursing through the entire $21 trillion US economy.
To wit, the Donald inherited a tired 90 month-old business cycle that was running out of gas and still is at month #124. But in late 2017 and the first half of 2018 it got a short-lived reprieve. On some measures like corporate CapEx (see below), it was more like an actual sugar high.
This reprieve is now over and done. That’s because it reflected one-time stimulants that are not likely to be repeated any time soon.