Chicago PMI slides. Recession?

An indicator which shows the state of the great US industrial heartland, the mid-west, is the last regional indicator to be released.  Unlike the others, it isn't calculated by a regional Federal Reserve Bank, but by the same people who calculate the national ISM (Institute of Supply Management) survey, except just for the mid-west, and is released a couple of days earlier than the national index.  It gives a good indication of what the national ISM figure will be.  The regional Fed surveys for June point towards a continued slowdown in the US economy, as does the prelim estimate of IHS Markit's manufacturing PMI for June.  It's all consistent with the picture of a US slowdown, but not recession.  Not yet.

Will the Fed use all these falling indicators to justify easing monetary policy?  GDP is still strong.  Employment is still growing.  The unemployment rate is flattish.   Personal incomes and consumption expenditure were both up in May, not down.   There's not an overwhelming consensus of data (yet!) which points towards the need for a rate cut, even though it is clear that the economy has slowed.  What will tip the Fed towards easing will be an actual fall in payrolls, and that may have happened in June (data out in a week's time).  But it might not, too—a jump in payrolls for June will  take a Fed Funds rate cut right off the table, while a fall will bring it on.  Either outcome will not be liked by equity markets, because right now they're factoring in a mild recession tempered by a dovish Fed.  A fall in payrolls implies recession, now, and with powerful downward momentum.  A jump implies no rate cuts.   The only "good" outcome will be a small rise in payrolls.  See you same time, same place next weekend.