US flirting with recession

June's PMI (interim estimates) fell again, for both services and manufacturing.  The manufacturing PMI is the lowest it's been since the GFC (global financial crisis), and now is only just above the 50% "recession line", i.e., the point at which 50% of respondents see output/sales/employment, etc, as falling.

 The average of the services and the manufacturing PMIs isn't quite so weak, but then services are less cyclical than manufacturing, and lag behind manufacturing in the cycle.  All the same, it's not far off 50% either.

I first forecast a 2019 US recession in June 2017, at my last presentation to our authorised reps before I retired.  I based that on my longer-leading index which was falling fast.  That has now stopped falling, and may have begun to rise.  Certainly, a Fed rate cut would cause it to start rising.  However, the lags are long (12- 24 months) so it's unlikely that the US recession will end before mid 2020, even if the Fed cuts rates now.  And that's before we get into trade wars, real wars, and the rapid fading of the Trump tax-cut sugar hit from last year.

Incidentally, the PMI survey results are consistent with the sharpest fall ever in the Fed's Empire State survey, and one of the top ten sharpest falls for the Philly Fed survey (it has a longer survey history).  Their little rebound over the last coupla months is well and truly over.

I'll be updated my short- and longer-leading US indices soon, but I need to do some work on a couple of their components first.  Give me a week or so.  After all, I am retired, and am still not 100% well after my recent illness.