This chart shows the average of the PMI and ISM indices for the US (before 2011, it's the ISM alone), broken up into the services and the manufacturing sectors, and the average of the two, shown by the blue line. (The relationship between the "whole-economy" PMI/ISM index and GDP is shown in the bottom chart, from 2000 to 2026, but I haven't updated the GDP data to include the latest release.)
After previous slowdowns or recessions, the rebound from the low point has been strong. This time round it has been feeble. Note how at the beginning of 2025, a strengthening recovery was aborted by Trump's tariffs. Then, just as the economy started to pick up again, Trump's Iran war has caused a renewed downturn. Now, so far, it's only one month of slowdown. But if the Iran war and the oil blockade continue, which seems all too likely, this downtrend will continue.
The 1973 and 1979 oil crises produced deep recessions and strong inflation surges. It looks as if this will happen again.
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| click to enlarge |
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