YOLO ("You only live once") spending as manifested by "revenge spending" in services after the bleak Covid years, fuelled by massive Federal deficit spending, has stopped the economy from plunging into deep recession. Although the PMI/ISM indicators are not turning up strongly, they have clearly bottomed. Remember, though, that the PMI and ISM surveys are diffusion indices, measuring how many respondents see sales, employment up on last month, which means if the overall index is below 50%, the majority of respondents still see sales/employment falling. The gentle rise in these indicators does suggest that this rate of descent is slowing, but only when they are above the 50% "recession line" will the actual economy itself be rising.
As usual, the line to watch is the thick green one, and that minimises the random month-to-month fluctuations. Remember, also, that these represent surveys of the manufacturing sector. Services have been slowing as "revenge spending" fizzles, but we won't know the services indices for another couple of days.
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