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Commentary No. 984

(SGS Subscription required) • UPDATED ALERT: New Recession Breaks into the Open, with an Annual Decline in Freight Activity Not Seen Since the Great Recession, May 2019 Zero Net Payroll Growth and Quarterly Contractions in Key Series
• As the Downturn Intensifies, So Too Should U.S. Dollar Selling and Flight to Gold, With the Stock Market Vulnerable to Massive Selling
• Fed Chair Powell Hinted at Possible Later Easing, but Current Conditions Justify Greater Accommodation Now; New Quantitative Easing Is Possible by September
• With FOMC Easing Hinted, U.S. Stocks Rose to New Highs; but a Greater Dollar Plunge and a Greater Gold Price Surge Each More Than Offset the Stock Gains
• Excessive FOMC Tightening and Rate Hikes Triggered the New Downturn
• When the Fed Shifted to Its Restrictive Monetary Stance, Much of the U.S. Still Had Not Recovered from Its Collapse into 2009; That Exacerbated Already Heavily Negative Consumer Financial Conditions
• Tightening Has Continued, With the May 2019 Monetary Base at a Six-Year Low, Down 3.2% (-3.2%) From December 2018
• Full Economic Recovery Requires More than Interest Rate Cuts and FOMC Easing
• Also Needed Are Meaningful Tax Cuts for Main Street U.S.A., and Stimulative Government Spending, Despite the Ongoing Budget-Deficit Disaster
• In Response to Such Deficit-Busting Stimulus, Global Markets Likely Would Savage the Dollar, Unless the U.S. Government First Could Put in Place a Credible Plan for Balancing Its Finances Once Economic Conditions Had Stabilized
• Government Action Is Unlikely, Though, Shy of Response to a Financial Crisis or Panic

Bullet Edition No. 11

• Major New Recession Continues to Unfold, With a Deepening, Broad Economic Contraction Evident in Key Economic Series, Along With Mounting Concerns on Wall Street and at the Federal Reserve
• Look for Renewed FOMC Easing by September 2019
• Real Annualized First-Quarter Gross Domestic Product (GDP) Growth Revised Lower to 3.07% from 3.17%, Against an Unrevised Fourth-Quarter 2.17%
• Massive Downside Revisions to Gross Domestic Income (GDI), Which Is the Theoretical Income-Side Equivalent of the Consumption-Side GDP, Highlighted Unstable Reporting in the National Income Accounts
• Fourth-Quarter 2018 Annualized Real GDI Growth of 1.66% Revised to 0.52%; Initial First-Quarter 2019 Growth of Just 1.43% Was Only 0.30% Net of Revisions
• First-Quarter GDP Remained Heavily Bloated, Distorted by Government Shutdown Disruptions to Data Gathering and Reporting
• Broader and Similarly Distorted First-Quarter Gross National Product (GNP), GDP Plus the Trade Balance in Factor Income (Interest and Dividend Payments), Came in at an Initial 2.66%, versus an Unrevised Fourth-Quarter 2.12%
• April Durable Goods Orders Declined Month-to-Month and Year-to-Year, Real Orders Ex-Commercial Aircraft on Track for Third Quarterly Contraction

Bullet Edition No. 10

(SGS Subscription required) • Economic Downturn Continued into Second-Quarter 2019; Faltering April Freight Volume Presaged Declines in Production and Retail Sales
• April Manufacturing Turned Negative Year-to-Year for First Time Since 2015, When Freight Volume Also Turned Negative, Signaling the Onset of an Unofficial Double-Dip Recession in Production and Manufacturing
• Production and Manufacturing Suffered Heavy Downside Revisions Along With Unexpected Sharp Declines in April Activity
• April Single-Unit Building Permits Signaled an Unexpected Deepening Downturn
• April Existing-Home Sales Declined Month-to-Month and Year-to Year
• Fourth-Quarter 2018 and First-Quarter 2019 Quarterly Contractions in Real Retail Sales Held in Place, Along With an Unexpected, Sharp April Decline
• Shutdown-Disrupted Retail Sales Data Remain of Suspect Quality
• Latest Round of Economic Data Implied Downside Revisions to First-Quarter 2019 GDP, With an Intensifying Second-Quarter Downturn
• Surging Consumer Optimism Tends to Mirror the Tone of the Popular Press
• Market Sentiment Should Continue Shifting Towards Renewed Fed Easing

Bullet Edition No. 9

• Inflation Increase Reflected Gasoline Prices, Not a Booming
• Real Average Hourly Earnings Declined for the Second Straight Month
• Weaker Than Expected Economic Reporting Looms
• Downside Revisions to First-Quarter GDP Should Follow
• Market Sentiment Should Begin Shifting Back Towards a Fed Easing

Bullet Edition No. 8

• Even in a Bifurcated , Growth Depends Upon a Financially Healthy Consumer
• Yet, FOMC Policies Still Strangle Consumer Liquidity
• Signs of a Deepening Contraction in the Monetary Base
• New Recession Remains in Play, Still Likely to Force FOMC Easing by September, Irrespective of Federal Reserve Protestations to the Contrary
• Headline Gains in April Payrolls and First-Quarter Gross Domestic Product Were Not As Strong As They Appeared
• GDP Showed Multiple Levels of Contracting Consumer Activity
• Advance March Trade Deficit Reconfirmed Collapsing U.S. Goods Consumption, Not Otherwise Fully Accounted for In the Advance GDP
• Amidst Downside Revisions, Total Nominal U.S. Construction Spending Contracted Year-to-Year and Quarter-to-Quarter; Last Seen Going Into the Great Recession
• April Unemployment Rate Declined to a Record-Low 3.58%, Amidst a Declining Labor Force, Reflecting Mounting Labor-Market Distress
• How Can Full-Time Employment Be In Decline With a Booming ?
• Downside Revisions Likely Follow for First-Quarter GDP Growth