This graph says it all — US 2016 Recession Already Here!

Thursday, August 4, 2016
By Paul Martin

By David Haggith
August 4, 2016

This graph by 720Global shows how spot on my pronouncement of a US 2016 recession is and how precarious the path ahead. In spite of the lack of any official declaration by the US government or its economic priesthood, I’ve stated more than once in 2016 that the US is already in recession. Several interesting observations can be made from this graph:

The red line marks current US GDP (1.2%) as estimated by the US Bureau of Economic Analysis (BEA). At virtually every point in the last seventy years when US GDP hit 1.2%, the US has been solidly in recession (blue areas). In other words, the US was not ABOUT to go in recession at that level of growth, but was IN recession each time … with only three exceptions. Two of those are “exceptions that prove the rule” (i.e., the very reason these exceptions happened prove how significant the underlying rule or belief is):
Twice during the years since the Great Recession, GDP touched this low, and we did not go officially into recession, but look at why: In both of those instances the US only averted recession because the Federal Reserve immediately kicked in massive doses of quantitative easing. (The Federal Reserve is not going to do any immediate quantitative wheezing to keep us above the line this time because all of its talk has been about raising interest rates. More wheezing would prove the Fed is unable to raise interest rates (as I said last fall would be the case after made its first raise in December. So, the Fed will only apply QE at this point when it sees for certain that its patient is dying, which will be too late.)
The graph reminds us of something we’re all aware of: Based on the average frequency between recessions, the US is due for a recession in 2016 anyway.

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