Seeing a Slowdown, but No Recession!

Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

A survey by the National Association for Business Economists this week showed that 74% of economists now predict a recession before 2021.

What could cause a recession? It could be a combination of factors — the U.S.-China trade war, tight money or a geo-political disaster. In July, the U.S. government announced that real gross output (GO), the broadest measure of economic spending, rose only 1.6% in the first quarter, much less than real gross domestic product’s (GDP) increase of 3.1%. For my press release on first-quarter gross output (GO), go to

The Economic Leading Indicator Index, put out by the Conference Board, declined for the first time this year in June. The Conference Board reported, “The US Leading Economic Indicators Index fell in June, the first decline since last December, primarily driven by weaknesses in new orders for manufacturing, housing permits and unemployment insurance claims.”

A negative yield curve — where short-term rates are higher than long-term rates — also is evidence of a possible recession. The last two times we had an inverted yield curve (2000 and 2007) we had recessions.

The Conference Board added, “For the first time since late 2007, the yield spread made a small negative contribution. As the U.S. economy enters its 11th year of expansion, the longest in American history, the index suggests growth is likely to remain slow in the second half of the year.”

If the inverted yield curve continues, it would suggest a slowdown ahead and perhaps the end of the 11-year bull market.

There is growing talk in the White House for the need to stimulate the economy to prevent a recession, through tax cuts and more government spending. More importantly, monetary policy is already starting to loosen. As the following chart indicates, the broad-based money supply (M3) is now growing at 9.3% a year in the United States.

That probably means the slowdown in economic growth in the United States is temporary. A full-scale recession is unlikely at this stage.

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Good investing, AEIOU,

Mark Skousen

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Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

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