More from MoM, Mish, and Maddog, below the fold.
MoM is forecasting, er, actually, backcasting a recession starting in March. She believes this is a business led recession but one which will mimic European style recessions meaning long, deep, and slow to recover. These recessions are what happens once the government sector becomes too big, and begins driving the recession. The less government, and the more free markets, the more the recessions are steep but quick to resolve with a rapid powerful recovery.
"This is still a business-led downturn, and those do not have a sudden effect on employment. Inventories are too high, still. This is not going to rebalance on its own.
The dollar is weakening in response to recent data, but global growth trends are not very strong, and it will be hard for US manufacturing to pick up on export orders even with a weaker dollar."
To make matters worse, the world economy is terrible right now. The oil producing nations are in the tank, the BRICS have been shattered with only India even remotely healthy, and frankly, India has taken a bit of powder lately. Europe is in tatters, although Germany has been a relatively bright spot . . .
. . . and right on cue I saw this over at Mishtalk: German Industrial Output Declines Second Month, Much More than Expected | MishTalk.
Is it serious or just a soft patch? It really doesn't matter what with the rest of Europe moribund, Germany in a soft spot will be bad. I expect this will even more limit the ability of US businesses to capitalize on the weakening dollar. With everyone hungry, and few contracts available, the competition will be fierce, prices paltry. This is unlikely to be the stuff of recovery.
Mish also agrees essentially with MoM about autos and inventories.
"Despite the increase in sales, the inventory-to-sales ratio remained a problematic-looking 1.36.
Individual components such as autos, hardware, apparel, and machinery look worse."
Wholesale Sales Bounce 0.7% Led by Petroleum; Autos Problematic | MishTalk
I have no reason to dispute MoM's forecast of recession starting in March. If it has started, it is a slow, weak start which could mean a short weak recession, or something much more like MoM envisions. Let's hope for the former, but I would suggest preparing for the latter. A long, deep recession with slow recovery is not what we need after the near non-recovery from the last recession. The world really needs a healthy America right now, instead it is going to have Obama's weakened, threadbare America.