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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsWatch Out for the U.S. Recession Signal in Friday's GDP Report
JPMorgan sees 50 percent chance of downturn in two yearsBy Rich Miller
On the face of it, the economic update that the government is releasing on Friday should be a big yawn. Economists expect the revised numbers to confirm what we know already that gross domestic product grew at an annual rate of just 1 percent in the final three months of 2015.
But it would be a mistake to dismiss the release even if you're off from work for the Easter holiday. That's because the government also will be publishing its first estimate of what happened to company profits in the period. And the news isn't expected to be pretty.
Pre-tax earnings probably fell 9.5 percent in the fourth quarter from a year earlier, after dropping 5.1 percent in the third, according to economists at JPMorgan Chase & Co. in New York. That would be the biggest decline since the 31 percent free fall in the closing months of 2008 during the height of the financial crisis.
Profits last quarter probably were unusually depressed by a $20.8 billion penalty payment by BP Plc to settle claims over the 2010 oil spill in the Gulf of Mexico. But even after stripping out that one-time charge, earnings likely still fell about 5 percent, by JPMorgan's reckoning.
Why is that important? Well, history shows that when profits fall, the economy often follows them downwards. An earnings hit of the size that JPMorgan says is taking place has led to a recession within three years about 90 percent of the time.
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http://www.bloomberg.com/news/articles/2016-03-23/watch-out-for-the-u-s-recession-signal-in-friday-s-gdp-report
Vincardog
(20,234 posts)Jitter65
(3,089 posts)Many jobs just can't be exported and automation is having its negative affects in China, India and Mexico also.
The world is a different place than it was 20-30 years ago. It began changing in the 70's but no one paid attention. Too busy loving their "stuff" and moving on up.
Vincardog
(20,234 posts)Are not enough to sustain the economy.
Wellstone ruled
(34,661 posts)story for a couple of weeks. We are the only Market in the World at this date. China is in full decline until they can convert from a Mercantile system to a Consumerism model. Eourpe is in a jam until the Bullheaded Brits come to their senses. Remember,England has zero manufacturing left and their Banks are in big time trouble. And there is that threat of the GOP will collapse purposely our economy and blame Obama. By the way,Bloomberg has been doing on air interviews with so called economists,chanting this same line of blaming Obama for the new greatest Recession in History.