Tag Archives: recession


FEBRUARY 12, 2024 – The January report came in at 3.1%, just below my forecast of 3.2%-3.3%. and above the consensus estimate of 2.9%.
The 3-month annualized inflation rate is 1.0%. The 6-month annualized inflation rate is 1.8%. These figures are lower than the annualized rate (3.1%) and thus indicate the annual CPI should drift lower.
The data is predicting a reading between 2.6% and 2.7% next month. Like last month, I think this will be way off. Inflation is historically high in January and February. I am going to forecast 3.0%-3.1% for next month’s figure.
ECONOMY – We have had 6 straight quarters of above 2% GDP growth since the recession in the first half of 2022 ended. The last two quarters have been above 3% (!) and some forecasts expect another 3%+ figure for the First Quarter of 2024. With annual population growth around 0.7%, any GDP growth above that amount is exceptional. The chance of a recession occurring this year remains slim to nil. It certainly won’t occur in the first half of this year.
STOCKS – The Dow 30 continues its march towards 40,000. I never did see anyone else predict 40,000 this year. I suspect there are a few others like me out there somewhere. As they saay, never count your chickens before they hatch. 38k+ is not 40k. But, the stock market is saying the economy this Summer should be extremely strong.
The recession mongers couldn’t have been more wrong for the past 20 months. They will continue to be wrong into the foreseeable future.
The Mann


UPDATE JANUARY 11, 2024 – The latest Bloomberg survey of economists shows 50% of them expect a recession this year. Based on the stock market being at all-time highs, it is saying there is zero chance of a recession in the next 6 months. I won’t use 0% in my forecasts. But, as part of my goal to provide precise measurable forecasts, I will say there is a 1% chance of a recession (Two consecutive negative GDP quarters) occurring in the first half of 2024. As the odds of the 2nd Quarter being negative are low, I place a chance of a recession starting by the end of the 3rd Quarter (would require negative GDP in 2nd and 3rd Quarters) at 5%. I just as well place a percentage on a recession occurring in 2024 as a whole. My estimate is that is only about 10% at this time. There is no doubt GDP growth in 2024 will be lower than 2023. But, that does not mean we will have a recession. We have had very strong economic growth for 6 quarters since the early 2022 recession ended. I will update these percentages as new information warrants such.

DECEMBER 19, 2023 – With so many recession indicators being wrong over the past 2 years, I thought it would be good to compile a list. Although they have failed, this doesn’t mean that in 20 years we won’t look back and say this indicator has predicted 4 of the last 5 recessions. But, for now, these indicators have simply been wrong. I will continue to update this list as I encounter such (erroneous) indicators. Many of these I have never followed or heard of. But, as I am made aware of them predicting a recession that hasn’t, and isn’t, going to occur, I will add them to this list.
1. The (Mis)Leading Economic Indicator turned negative in early 2022 and been consistently forecasting a recession for over 18+ months.
2. M-2 Money Supply is the most negative it has been since The Great Depression.
3. Inverted Yield Curve – The yield curve turned negative in July 2022. It forecasts a recession 11-13 months from that event – which was June to August 2023. This indicator had been a perfect 8-for-8 since WWII. Make that 8 out of 9 now.
4. Empire State Manufacturing Backlogs – The last two readings have been -23.2% and -24%. The only two times this has occurred was in 2001 and The Great Recession. It is doubtful the current decline will coincide with a recession.

5. The University of Michigan’s Consumer Sentiment Index has been below 75 for 29 consecutive months. That has surpassed the prior record from February 2008 to May 2010.

6. The National Association of Credit Management’s (NACM) Credit Manager’s Index (CMI) registered 54.6 and 54.2 in the 3rd and 4th Quarters of 2023, respectively. It did not fall below 55 during the 2010’s expansion and the last time it fell below 55 for two consecutive quarters was in 2008 (this excludes the spike low in the pandemic).

7. The American Institute of Architects Architecture Billings Index (ABI) has dropped to 44.8. Previous drops below 45 signaled a recession in 2001’s first quarter and 2008’s first quarter. HOWEVER, Architects have a lead time of 9-12 months on commercial building activity. Thus, this indicator might be signaling a recession at the very end of 2024 and into 2025 – which I have mentioned in prior posts as a possibility. Especially, since that occurs after the Presidential Election. So, I might move this indicator from this list to the small list of indicators that are still accurate in predicting recessions. But, I wanted to place it here in the interim so you could be aware of what it is saying.

8. Wholesale Sales excluding Autos and Oil turned negative (-2.8% YOY) in 2023. Besides the Pandemic, this indicator coincided with recessions in 2001 and 2007-2009. It also was negative in 2015-2016, which was termed an industrial recession.

9. Banks Reporting Stronger Demand for C&I Loans bottomed at around -60% at the end of the recessions in 2001 and 2007-2009. It bottomed at -54.5% in the 2nd Quarter of 2023 (one year after the recession I say occurred in the first half of 2022). At any rate, no recession occurred in 2023 and one is highly unlikely in 2024. The index has rebounded to -23.7% in the First Quarter of 2024. Still weak. But, improving.


SEPTEMBER 25, 2023 – Most importantly, only 3 months to Christmas:) And I am sure you have seen all of the Christmas stuff in the stores already. Next year it will be out in July. Ridiculous.
Two more recession indicators are wrong this time around. The (Mis)Leading Economic Indicator has declined for 17 straight months. I assume its purpose is to forecast a recession to occur within a few months after several negative readings. It has been wrong for over a year. Maybe this is where the broken record (look it up youngsters) recession mongers get their reasoning for thinking a recession is about to occur. Just fyi, the only other times it had this long of a streak was 1973-1975 and 2007-2009. The two worst recessions since The Great Depression.
The third indicator that has been wrong is M-2 Money Supply. It is more negative than it was in The Great Depression! Yet, no recession. In fact, it is looking like 3rd Quarter GDP may show an acceleration in growth to over 2%. However, I will say that is not a lock as I have seen forecasts from 0.5% to over 5.5% (Fed Atlanta). This quarter will be very unpredictable. But, it should definitely be positive and thus we can officially close the case on there being no recession in 2023.
Let me bring something up for the first time. I think I will be harping on this for the next few years. I believe the reason many prominent indicators are wrong this go around is due to what has happened since the pandemic. Almost all indicators soared to extreme high readings never seen before. And many are falling to record lows. What I am seeing is if you draw a straight line from say 2010 or 2015 through 2023, these indicators are exactly where they should be. i.e. The lows are evening out the highs and overall we are reverting to the mean.
I saw this recently in national retail sales. Adjusted for inflation, retail sales have been flat for the past 18-24 months. However, they increased significantly after the pandemic. If you apply the 2010-2019 compound annual growth rate to 2019 sales, you will be exactly where we are at in 2023. I will discuss more examples and provide more specific information as I encounter graphs showing this occurrence.
FED FUND RATES – The Fed did what it was told to do and held rates the same in September. Also, they went ahead and said what the market has forecast for a long time and that is another rate hike lies ahead. The 100% trend of the Fed following the market continues.
HOUSING – As I noted in a prior blog, the market is signaling weakness in the housing market after forecasting the strength we have seen all year. The homebuilder stock index has declined 10% from its July top. We need to continue to watch this play out. It is telling us we should see weakness next Spring. What will slow the accelerating strength in the housing market? Maybe 8%+ rates on 30-year mortgages? About the only thing I can think of. But, it doesn’t matter. The market just says it will happen. The price trend in the 4th Quarter will tell us if the Spring slowdown is just that or the start of a more significant downturn like we had in the second half of 2022.
REGIONAL BANKS – These stocks have declined a significant 15% from their July highs. Basically, they declined some more after the SVP failure, then soared over 40%, and now down 15% – in the end, they have gone nowhere since the Monday after the SVP failure. What is the market telling us? It definitely says not to expect the 250-400+ bank failures that so many people are predicting. Those people expected such to occur by now, in fact. As far as I know, the number remains at one small bank in Kansas. In regard to CRE loans, banks have been refinancing these all year long at higher interest rates. I haven’t heard of any significant issues. The problems have occurred in the CMBS market – gotta hand it to the supposed smartest lenders and investors in real estate:)
INTEREST RATES – Treasury Bonds have broken below last October’s low. This means interest rates are at new highs for this downturn. As I write this, I see a headline saying they are at the highest level since 2007. However, we are now on the clock to look for a final bottom in this multi-year downturn in prices (increases in yields). That doesn’t mean it will occur next week. I am thinking it is several months away. Maybe around the beginning of the year. Too early to give a reasonable forecast re timing and price (yield). The 4th Quarter price action will get us much closer to predicting when the bottom is in. What should follow will be a strong bond rally back to the range of the Summer 2022 and April 2023 highs (lows in yields). First things first. Let’s have the current downturn play out and get a bottom in place. Bottomline, mortgage rates will not be going down the remainder of the year. And they might head over 8% on the 30-year mortgage.
Well, that was a lot to cover. I will probably post again once we get the October inflation reading.
Til then, Happy Fall.
The Mann


UPDATE AUGUST 27, 2023 – Although forecasters are often wrong, current data shows an expectation for GDP to grow 1.9% (up from previous forecasts around 0.6%!!!) in the 3rd Quarter and 1.2% in the 4th Quarter. This would result in over a 2.0% growth rate for all of 2023. How wrong can those recession mongers be!!! Remember, listen to what the stock market is forecasting and not to what the economists are saying.

For 2024, current estimates are +1.3% for the year with each quarter being in the +1.0-1.5% range. It is too early to much faith in those figures. They will certainly change by yearend. But, they have been going up, not down. And no quarters are forecast to be negative. Much less the required two consecutive negative quarters. Keep putting pressure on those people calling for a recession now in 2024, after they admitted being wrong about 2023.

AUGUST 23, 2023 – Most people are aware of the inverted yield curve indicator predicting a recession. Duke professor and Canadian economist Campbell Harvey is credited with ‘inventing’ this indicator. I question that, but it doesn’t matter. The indicator has a perfect 8-for-8 record predicting recessions since World War II.
What doesn’t get much attention is the indicator PRECEDES recessions. If you see a graph, you will clearly see that the inverted yield curve comes before a recession occurs. Mr. Harvey says a recession has started on average 11-13 months after the yield curve becomes inverted. That is easy to see. It is fact. No argument from me about this lead time.
BUT, what I notice from the historical graph is the yield curve has always been at +100bp and up to +200bp by the time a recession starts. This gives us a long lead time to deal with a recession. It takes a long while and is a major move for the yield curve to go from the current -0.68% up to +1.00%-+2.00%. Until we see significant movement towards positive territory, no worries about a recession starting soon.
If you want to see what Mr. Harvey says and see the historical graph I am referring to, cut and paste the following link:
Also, a sales pitch for a neat item I bought several months ago – The Tidbyt. Go to https://tidbyt.com/ to look at it and purchase one. It would make a nice gift.
Instead of having the Fake News Media on all day, I have a Tidbyt across the room from me. I have programmed it to give me current and future weather, info on tropical storms/hurricanes or other serious weather nearby, news headlines from various sources, the price of Bitcoin, and in the evenings the current 10-Year Treasury Bond yield and the difference between it and the 2-Year Treasury Bill. Right now, those are 4.34% and -0.68%. I will be aware of this moving towards zero well in advance. I do believe recently it was over -0.90%.
FYI, the yield curve stayed negative in July 2022. Thus, 11-13 months out is June to August 2023. Obviously, we are not in a recession. I believe I posted previously that this indicator would break its streak of accurate predictions. Mr. Harvey is saying be patient. He says ‘it is way too early’ to say the indicator is wrong. The stopped clock concept might make this indicator 9-for-9 one year. But, in my opinion, it is now wrong and is 8-for-9.
As there is no chance of a recession this year and the earliest it could possibly be would be the first two quarters of 2024, that would put us 18+ months out from when the yield curve went and stayed negative. Not unprecedented. But, certainly well beyond the norm.
I will wait to see +100bp to see if at that very moment we are in a recession. Remember, that will be a coincidence signal. It won’t be giving any lead time.
As I always say, we shall see.
The Mann


AUGUST 2, 2023 – As I predicted at the beginning of the year, by this Summer the broken record recession mongers would start throwing in the towel and admit there will be no recession this year. The first of many apologies comes from BofA.
The Mann
January 13, 2023 – Bank of America CEO Brian Moynihan said Friday the bank is preparing for a potential recession this year, including the possibility of a sharper downturn where unemployment climbs rapidly.
“Our baseline scenario contemplates a mild recession,” he said during a call with investors. “But we also add to that a downside scenario, and what this results in is 95% of our reserve methodology is weighted toward a recessionary environment in 2023.”
In the case of a more severe recession, Moynihan said the second-largest U.S. bank anticipates the jobless rate will climb to 5.5% in 2023 and remain at 5% or higher through 2024.
August 2, 2023 – (Bloomberg) — Economists at Bank of America Corp. scrapped their forecast for a recession in the US, becoming the first large Wall Street bank to officially reverse its call amid growing optimism about the economic outlook.
“Recent incoming data has made us reassess our prior view that a mild recession in 2024 is the most likely outcome for the US economy,” BofA economists, led by Michael Gapen, wrote in a note to clients on Wednesday.
“Growth in economic activity over the past three quarters has averaged 2.3%, the unemployment rate has remained near all-time lows, and wage and price pressures are moving in the right direction, albeit gradually,” they wrote.


JULY 30, 2023 – This is my 3rd and last post regarding my forecasts for the remainder of 2023. Today’s topics are banks and housing.
BANKS – I have been saying since the SVB/SBNY closings that week after week goes by without any closures. Finally(!), last week we had a bank in Kansas get closed down by the FDIC. Also, PacWest was acquired. At this point, we remain closer to my forecast of 0-10 closures than the 176-200 closures forecast by many people.
As for CRE loan defaults, I have dealt with an office building (100% leased – it appears the borrower went bankrupt for some other reason) and two churches (same loan). We shall see if this picks up.
The Regional Bank Index (KRE) continues to soar and is about 20% above the low set the Monday after the SVB/SBNY closings. It is a full 40%+ (!) above its most recent low. Please let all of them people that told you that banks were going down the tubes what you think of their opinions! They have cost the masses a 20%-40%+ return – in less than 4 months at that!!!
As an aside, the market is saying that it does not believe there will be a CRE loan debacle for banks. Either not many CRE loans will default and/or banks are well prepared and capitalized to handle the defaults.
HOUSING – Let me just present a bunch of stats that clearly shows the strength of the housing market. New home sales increased 28.4% from July 2022 to June 2023. According to the Case-Shiller Index, home prices are within 1% of their June 2022 peak. Redfin reports home prices are up 2.1% from a year ago. The American Enterprise Institute’s (AEI) Home Price Appreciation (HPA) Index was up 0.7% month-over-month in June. It has been up every month this year. Annual appreciation is at 2.9% and projected to increase to 6%-7% by yearend. The Homebuilders Stock Index is up an incredible 60% (!)from last year’s lows. Those who forecast a crash in the housing market continue to be way off the mark.
SUMMARY – With both bank and housing stocks at their highs, the markets are saying both industries will do very well through year end and into early next year. There is no sign yet of a slowdown occurring for either industry. Sadly, all of those economists, market forecasters, and pundits have kept the public from making 20%-60%+ returns in these industries. But, that has been the norm since the world’s largest casino came into existence.
To sum up up the 3 posts:
Inflation will be stubborn and rise slightly over the remainder of the year – probably stay in the 3.5%-4.0% range.
The economy has a near zero chance of going into a recession. Yes, GDP will slow down from the amazing 2.2% rate that occurred in the first half of the year. I will put this hidden little sentence out there to refer back to in 12-18 months – The chance of a recession occurring looks to be 4th Quarter 2024 into 2025. I suspect that a year from now the broken-clock recession mongers will have given up and admitted the economy is strong, et al. Just in time to be wrong again:)
And, per above, banks and housing should be rock solid into the 1st Quarter of 2024.
I will provide updates per usual. But, will revisit the 6-month forecasts (for 1st and 2nd Quarter 2024) around the Holidays. Yes folks, less than 5 months til Christmas:)
The Mann


UPDATE JULY 27, 2023 – 2nd Quarter came in at a whopping +2.4%. Far exceeding expectations that were below +1.5%. So, we have an economy that has expanded, not contracted, this year! The stock market told us this would happen. For anyone you know that has been predicting a recession in 2023, please ask them if they admit they have been totally wrong. People need to admit their errors and stop being broken clocks. If they don’t, they have no credibility. As I note in my original post below, it is likely the current forecast of +0.5% and 0.0% for the remaining two quarters will change to the upside as the year carries on. Will the economy slowdown from +2.0%-2.4%? Yes. The stock market has said it will be stagnant the remainder of the year. But, will we see two negative figures in a row? The odds are near zero. Plan accordingly.

JULY 22, 2023 – It is all but guaranteed that the recession mongers will be wrong about such occurring in 2023. As I forecast earlier in the year, by Summer (i.e. now) those people would begin to move their prediction to a recession occurring in 2024. Enough time wasted on the large group of media and economists that are broken records.
So, what does the future hold. The past 12 months have been very easy to predict for the economy, housing, and inflation. IF you just read what the stock market (i.e. Dow 30) is telling us. Yes, it is that simple. And, yet, 99%+ of the public and pundits don’t do it.
The Dow 30 peaked in December 2022 after bottoming in October 2022. That told us to expect weakness thru April 2023. Sure enough, the Silicon Valley Bank collapse and the associated bank panic occurred in March and April.
Since December 2022, the stock market trended sideways for 8 months. Just this past week the Dow finally broke thru the 35,000 level after about 7(!) failed attempts. So, what does this tell us? It tells us that the economy is expected to be stagnant for the last 6 months of this year. And, based on this upside breakout, the economy should see an uptick in the 1st Quarter of 2024. This is a very early interpretation as the breakout just occurred this week and is only a small amount above the December 2022 high.
Is the stock market, and thus smart money, correct? Yes. As usual. 1st Quarter GDP was +2.0% (revised from the initial report of 1.3%). 2nd Quarter GDP is project to be +1.3%-1.4%. But, 3rd and 4th Quarter GDP are expected to be barely in positive territory. Exactly what the stock market has told us would be the case for the past 8 months – a stagnant Dow 30 forecasts a stagnant economy 6 months out.
Forecasts obviously vary. I have seen most to be around +0.5% for the 3rd Quarter and 0% for the 4th Quarter. But, I think those forecasts are trending up due to the strengthening housing market (that will be my next post, so please come back:) ).
The recession mongers will be screaming they told us the economy was caving. One, they have been calling for a recession for over a year (right after the actual recession just ended!) and GDP has come nowhere two negative quarterly figures in a row. Two, the stock market has forecast the ups and downs with 100% accuracy. It hasn’t been a broken record.
Based on my forecast that the CPI will trend up the remainder of the year, I suspect the market will tell the Fed to raise the Fed Funds Rate several more times. Note, the public is wrong to blame Powell for raising rates. He is simply doing what the Fed has done forever – following exactly what the market has told it to do. So, the market has obviously priced in all Fed actions ahead of the Fed meetings because the market told them what to do at the meetings!!!
But, I digress…..my point is the recession mongers will remain a broken record as they will continue to say that the Fed’s raising of interest rates is going to push us into a recession. As of today, the stock market says they are wrong and a recession is not going to happen. I put my money on the stock market instead of all of those economists that have been 100% wrong for the past year (and longer).
I believe my forecast of the housing market will be my next post. I will probably combine it with a brief discussion on banks.
The Mann


JULY 4 – Hopefully, everyone had a fun and safe 4th of July. As we are half-way through this year, just a few items to mention.
I am seeing the first articles questioning all of those people that have been forecasting a recession. The tide is about to turn on all those who will have to admit they are wrong. People are finally starting to say hey we had the Recession last year. Thanks for joining the small club of us that have been saying this for a year now!
First Quarter GDP was revised upward from 1.3% to 2.0%. Second Quarter GDP forecasts are around 1% (Federal Reserve is projecting 1.3%). That would be an annual rate of 1.5%, which is in line with population growth. I am probably wrong about this, but I have always thought GDP growth should be about the same as population growth. If we look at a chart of the growth rates for both, we will see they have been declining in unison for 30+ years. I seriously doubt the last two quarters of this year will have negative GDP.
Lastly, Truflation analyzes 10 million data points (so they say) daily in comparison to the 80,000 data points (again, so they say) analyzed monthly for CPI. Thus, a quicker and more encompassing inflation rate is provided. Truflation is down to about 2% versus 4% for CPI, which will be about 3% in a few weeks when the next report comes out. Again, all of those people that a year ago were forecasting 10%+ inflation this year need to stand up and admit they were wrong.
Oh, the housing stock index I mention from time to time hit 80 this week. Up from a low of 53 last October. That is a nice 50% move the masses missed because the media was talking about the upcoming housing crash. Houses in my market are back to selling above list price and instantaneously, again. As I have posted, 7%+ mortgage rates are not an issue for people buying houses.

For a summary of recent economic data, this is worth checking out:

Strong economic data turns recession fears into recession doubts (yahoo.com)
Happy Birthday America!
The Mann


JANUARY 26, 2023 – Say you saw the following list of data points: +2.3, +6.9, -1.6, -0.6, +3.2, +2.8, +0.4, +0.3, +0.2, +0.1. To be upfront, the first 6 numbers are actual and the last 4 are future estimates.
Assuming positive is good and negative is bad, when would you say the bad event occurred? Did it occur just once? Or do you see data showing multiple bad events?
To me, the bad event occurred when the data was -1.6 and -0.6. It does not occur anywhere else. Albeit, the last four numbers aren’t anything to cheer about on the good side.
I keep saying – the Recession occurred in the first half of 2022 – and asking – why is everyone saying 2023 will see a Recession?
As for the last four numbers, I have seen estimates of GDP growth around 1.0% for 2023 with the latter half of the year being the weakest. Again, it is likely there will not be two consecutive quarters of negative GDP (the definition of a Recession….like it or not….I have never been a fan….what if we had -0.5, +0.1, -0.7? technically not a Recession…but, to me, that looks like a Recession…anyway, we have had this definition for decades).

If I could define Recession using GDP only it would be 2 or 3 consecutive quarters where the sum is negative. But, no one asked me:)

Lastly, the favorite service I subscribe to is forecasting a -1.6% GDP in the 1st Quarter of 2023. That would be a significant decline. The argument is over half of the 4th Quarter’s 2.8% increase was due to increasing inventories and that will be fully reversed in the 1st Quarter.

I haven’t even tried to figure out how to forecast GDP. Forecasting CPI was a big enough challenge. For now, I will leave GDP forecasting to others.

The Mann


JANUARY 2, 2023 – Happy New Year! I hope the year is good for all.
As we start 2023, the housing market is solidly in Step 4. That is when all of the cars on the rollercoaster are speeding downward together. Prices are declining and accelerating the pace of their decline.
Step 5 will be when the decline starts to slow down. e.g. annual price declines might go -8.0%, -10.0%, -11.0%, -11.5%. I expect some-to-many markets will start to see this in the 2nd Quarter.
Step 6 is when the lead cars on the rollercoaster reach bottom and start to turn up. Just the opposite of last Spring when the rollercoaster reached the top and the lead cars started downward. At this point, you have some markets still accelerating in their annual price decline and others level at their price decline level, and some where the price decline starts to head back upward towards 0%. I can see this happening in the 3rd Quarter with a slight chance it might even start towards the end of the 2nd Quarter. Readings go -9.0, -10.0, -10.0, -9.0.
The question right now is can Step 7 occur by yearend. I think there is a chance it can. In this Step the rollercoaster will be heading back upward towards say Ground Level (i.e. 0% price change in past year). There will still be many markets with negative price changes. Others will be back to near level and some will actually have positive price change readings. I would say right now no one is expecting any markets to have price appreciation this year. I think there is a chance for such to occur in the 4th Quarter in a few markets. About the same odds as last Spring when I thought full blown price declines could occur by Yearend 2022.
As always, we shall see how things play out. I will try to remember to update my forecast mid-year.
Always glad to hear your thoughts.
The Mann