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By New_Deal_democrat April 7, 2015 12:35 pm
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There will not be any consumer-led US recession

There's no doubt that there has been a slew of negative (retail sales), or just relatively poor (jobs) data for the US recently.

Further, if the weekly steel production and rail transport numbers are to be believed, March is likely to give us another poor industrial production report.  If the weekly retail sales numbers are to be believed, March's report will be positive, but not nearly by enough to overcome the steep February downturn.

So is the US importing recession from the rest of the world?  The NBER is generally believed to rely, first and foremost, upon industrial production, followed by employment, real sales, and real income, in determining if there is a recession.  

Here is Doug Short's current graph of those four data series:

So am I concerned that the US is entering a downturn?  No.

The simple reasons are:  houses and cars.  These are the two biggest purchases consumers make, and consumers are 70% of the US economy. Here's the record of housing permits (red) and vehicle sales (blue) going back 40 years:

Note that both turn down well in advance of a recession.  Typically the order is housing first, and then cars.

So let's zoom in on the last year:

After stagnating a year ago, housing permits made a new post-recession high in November, and  equated that high in February.  Vehicle sales followed, stagnating in the second half of last year, but came in over 17 million annualized for only the third time in March.

The turndown in retail sales has been in consumables, not durable goods.  This indicates the effect is likely to be transitory.

There simply is no reason to believe that there is any consumer-led US downturn happening now, and no reason to believe one will happen in the next 6 months at least.

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