The Institute for Supply Management reported Friday its manufacturing purchasing managers index in February fell to the lowest level since November 2016.
It’s funny how often that date is cropping up.
The ISM index now joins other economic series falling to the lowest level since President Donald Trump surprised almost everybody with a victory, leading to expectations, in many parts realized, of tax cuts and deregulation.
But two years later, the luster appears to be fading.
• The University of Michigan’s consumer sentiment index hit Trump-era lows in January, and only inched higher in February.
• The National Federation of Independent Business — a very pro-Republican trade group — reported its small-business optimism index in January fell to the lowest level since November 2016.
• The Philadelphia Fed’s manufacturing index fell in February to the lowest level since May 2016, when Trump was putting the finishing touches on securing the Republican nomination.
• Housing starts in December fell to the lowest level since September 2016. In that same month, the National Association of Home Builders housing market index fell to the lowest level in more than three years, though it’s edged higher the last two months. Even so, February’s reading of 62 is lower than levels it held all through 2017 and most of 2018.
• Retail sales in December registered the worst monthly reading in nine years.
• The 12-month growth rate of factory orders in December was the lowest since November 2016.
This slowing in economic indicators is one reason why most economists outside of the White House expect a slowdown in 2019. Yes, there was a 35-day government shutdown, and U.S.-China trade tensions have simmered for months. That first issue has been resolved and the second one may be as well. But there’s a sense that — as the director of the Congressional Budget Office put it on Thursday — “stimulus wears out after a while.”
Now, it’s not the case that an economy slowing down has to enter recession, particularly one with an economy adding, as it did in January, 304,000 jobs in a month.
But it should be noted that a New York Fed model based on the difference between 10-year TMUBMUSD10Y, +0.00% and 3-month TMUBMUSD03M, +0.00% Treasury rates indicates a 24% chance of a recession in 2020 — the highest such reading since the Great Recession in 2008-09.
