Main Street recession talk is disrupting small business plans and bubbling Downtown to Wall Street. Another short-term interest rate today cut (second time this year), a massive overnight funding market shortage for two-consecutive days (first time in more than a decade), inverted yield curve for first time in 13 years, trade tariff/consumer taxes set to raise consumer consumption costs by nearly $100 per month, and, oh yes, rapidly, and most significantly, deteriorating consumer confidence, affecting two-thirds of the U.S. economy.
Looking at consumer credit behavior is more evidence. Reviewing the latest delinquency numbers show more Americans slowly falling behind on automobile and first mortgage payments. Seasonally adjusted early stage, and late stage, credit card delinquency, as well as charge-offs, have also been creeping upward, as major credit card issuers began beefing up credit card loan loss reserves earlier this year.
Perhaps the most eerily reminiscent consumer behavior pattern is the accumulation of credit card debt. U.S. revolving debt has skyrocketed in three of the past four months. This is exactly the trend exhibited in late 2007 just before the start of the Great Recession.
Need CardTrak add the Manufacturing Purchasing Managers Index which sunk to its lowest level since September 2009. Throwing more fuel on the fiery recession talk is the political uncertainty produced by inexperienced, incompetent and radically incoherent current administration.
Main Street Recession Talk is no longer just Trash Talk. Refi your house, consolidate your personal debt, sideline major purchases, and save, save, save your hard-earned real dough, notes Robert McKinley also Chief of RAM Research.
Small Businessowners See the Light
Despite a good month for small businesses optimism slipped in August because fewer owners said they expect better business conditions and real sales volumes in the coming months. The NFIB Small Business Optimism Index fell 1.6 points to 103.1. However, job creation accelerated, positive earnings trends improved, and quarter-on-quarter sales gains remained strong.
The NFIB found the Uncertainty Index rose four points in August, suggesting that small business owners are reluctant to make major spending commitments. In fact, the main impediment to more growth is the record level of no qualified workers.
Owners raising average selling prices fell five points to a net 11%, reversing July’s seven point surge. Price hikes were the most frequent in wholesale trades (14% lower, 30% higher), the sector most likely to feel the effects of tariffs. Owners planning price hikes fell five points to 17%. Eleven percent reported cutting selling prices in recent months, and only two percent plan to do so. That suggests most price cutting is an unplanned response to market conditions.
Manic Predictions ?
“In spite of the success we continue to see on Main Street, the manic predictions of recession are having a psychological effect and creating uncertainty for small business owners throughout the country,” said NFIB President and CEO Juanita D. Duggan. “Small business owners continue to invest, grow, and hire at historically high levels, and we see no indication of a coming recession.”