Two of us are still adamant that a recession has started. The other is Danielle DiMartino Booth, in her best video yet. Please take a look.
![](https://i0.wp.com/mishtalk.com/wp-content/uploads/2024/07/All-Hell-Breaks-Loose.png?resize=1024%2C564&quality=80&ssl=1)
GDP Rises 2.8 Percent, So What?
Following today’s GDP report, many people are crowing “no recession”.
Well, we’ll see about that. I side with the even more emphatic Danielle DiMartino Booth who says “all hell breaks loose”.
Sadly, most don’t know the definition or how it’s decided. (Hint: It’s not 2 quarters of declining GDP.)
Acknowledgment by the NBER, the official arbiter of recessions, is always late and accompanied by negative revisions.
“All Hell Breaks Loose”
At the 00:00 Mark: All Hell Breaks Loose
“I get the sense that something is going to give in the next few months and that all hell breaks loose.”
“This is the United states of America in Recession. Everyone is getting fired, across all industries. And it’s happening really fast.”
[Mish note: Danielle does not mean “everyone” literally.]
At the 17:45 Mark: Construction Hard Wall Nightmare
“This Economy hit a hard wall in October 2023. Everything I am hearing from people on the street and clients, something happened in October. And now we have builders and they have a problem. They have more completed spec homes than anytime since 2010 [Mish: 2008 if you factor in started but unsold homes]. According to Redfin, only 47 percent of the apartments that were delivered in the first quarter were move into. And there is a half-million units in the pipeline this year. Another half-million units in the pipeline next year. On the apartment side, I think they were hoping the nightmare would end in 2024, but developers have pushed completing projects out further to delay the pain.”
At the 28:00 Mark: Unemployment Rate
“The unemployment rate has politely been increasing to 4.1 percent since it troughed at 3.4 percent. When economies turn, there’s no more politeness about it.”
“That’s why we have seen in the University of Michigan data, the steepest decline in the history of data back to 1968 of people’s perception of their income declining. People know that their paychecks are shrinking and or their wife or husband is going to lose a job.”
“It’s no longer possible to gaslight the United States populace. They know something is wrong.”
At the 31:00 Mark: Full-Time Jobs
“The bottom line is we have lost 1.5 million full-time jobs. I can’t tell you how many Ubers I have been in where it’s a first-time driver.”
“Americans are working as much as they can, but Americans don’t have enough work to make ends meet. It is a tragedy that we are losing so many full-time positions, and so many people are scraping by.”
At the 34:50 Mark: A Lot of Unrest
“Something is definitely going to give in the next few months. I love metaphors. And it is a blazing hot summer across the country and I don’t find any coincidence in that. I always look for metaphors in life. A lot of people are angry and bitter, they put off starting families because they can’t afford them and they can’t afford the housing. There’s a lot of unrest.
“What I hear from the head of a food bank in Tampa, Florida, that he’s gone from 20,000 to 40,000 per month, and from the moment the doors open until the moment the doors close, there are people lining up to get food to feed their families. Something has gone wrong.”
Thanks Danielle!
Now, let’s take a look at some recent data.
July 5: Jobs Much Weaker than Expected, the Unemployment Rate Ticks Up
Counting negative revisions, there was unexpected weakness across the board in June, especially private and manufacturing payrolls.
![](https://i0.wp.com/mishtalk.com/wp-content/uploads/2024/07/Nonfarm-Payrolls-and-Employment-Level-2024-06.png?resize=1024%2C633&quality=80&ssl=1)
July 8: Weak Data Says a Recession Has Already Started, Let’s Now Discuss When
I’ve seen enough. A recession has started. Let’s discuss starting with a very good indicator that has few false positives and no false negatives.
![](https://i0.wp.com/mishtalk.com/wp-content/uploads/2024/07/Sahm-vs-McKelvey-Recession-Indicator-2024-06A.png?resize=1024%2C594&quality=80&ssl=1)
Based on McKelvey recession indicator, Danielle points to a recession start in October 2023. I think recession started in the second quarter of 2024 using a slightly different trigger.
Perhaps it’s in between. First quarter 2024 anyone?
Regardless, very few of us are this adamant, especially following today’s GDP report: Real GDP Rises 2.8 Percent in Advance Estimate
Negative revisions will be the deciding factor. We both think very negative revisions are coming.
July 17: 5 out of 12 Fed Districts Show Flat or Declining Economic Growth
Let’s tune into the Fed’s Beige Book summary of economic activity in the twelve Federal reserve districts.
This looks very recessionary because it is very recessionary.
July 18: Continued Unemployment Claims Jump to the Highest Level Since Nov 2021
After stabilizing for about a year, continued unemployment claims have surged in the last two months.
![](https://i0.wp.com/mishtalk.com/wp-content/uploads/2024/07/Continued-Unemployment-Claims-2024-07-18.png?resize=1024%2C626&quality=80&ssl=1)
This is hard data, and it ties in with the second-quarter recession theory.
July 19: Three Top Reasons Mortgage Delinquencies Are Rising
Mortgage delinquencies are not at a seriously problematic level, but they are rising for ominous reasons.
Mortgage delinquencies are not at a seriously problematic level, but they are rising for ominous reasons.
![](https://i0.wp.com/mishtalk.com/wp-content/uploads/2024/07/Reasons-Given-for-Mortgage-Delinquencies.png?resize=1024%2C636&quality=80&ssl=1)
The two top reasons for rising delinquencies are reduction of income and excessive obligations.
Reduction in income, what’s that tell you about full-time jobs?
July 25: The Yield Curve Is About to Uninvert, Is That a Recession Indicator?
The yield curve went through its longest period of inversion ever and is now on the cusp of uninverting. Some say this is a recession trigger. Let’s investigate.
This won’t lead to a recession because a recession has already started.
Q:Has that ever happened before?
A: Yes, at least twice.
Two Consecutive Recessions Without Uninverting
![](https://i0.wp.com/mishtalk.com/wp-content/uploads/2024/07/Yield-Curve-Inversions-vs-recessions-10yr-2yr-1977-1981.png?resize=1024%2C686&quality=80&ssl=1)
Construction Hard Wall Nightmare
Regarding Danielle’s “Construction Wall Hard Nightmare”, please see Homebuilder Inventory of Started But Unsold Homes Is the Highest Since 2008
There are 376,000 homes that have been started, of which 102,000 have been completed. It’s the most since the middle of the great recession.
The homebuilders’ inventory of started but unsold homes is steeply rising as sales drop. It will take price cuts to clear inventory.
![](https://i0.wp.com/mishtalk.com/wp-content/uploads/2024/07/New-Home-Sales-vs-Homes-for-Sale-2024-06.png?resize=1024%2C654&quality=80&ssl=1)
Signs of Severe Credit Card and Auto Loan Stress in Generation Z
The economy is slowing and that will hit the zoomers first and the hardest, especially renters.
Tying the economic reports and political polls together please consider Signs of Severe Credit Card and Auto Loan Stress in Generation Z
There are 10 charts in the above link. Please check it out.
Nearly everything fits the recession picture. Negative revisions will take care of the rest.
Finally, please see Dudley Changes His Mind, Says “Fed Needs to Cut Rate Now” to Avoid Recession
Citing the McKelvey recession indicator, former NY Fed President Bill Dudley, wants the Fed to cut rates now.
It’s too late Bill, recession has started. And “all hell is about to break loose.”