The plummeting stock market is signaling a serious slowdown, if not a recession. But the economy can turn quickly

Stock Market News Today

Save $7.50 with code MOVIE off purchases of $50 or more of Regal email gift cards.

The plummeting stock market is signaling a serious slowdown, if not a recession. But shopping malls were packed into Christmas Eve. Only one of those trends will continue into 2019. Picking the winner will be profitable but won’t be easy.

The crux of the problem: The early indicators of trouble, such as stock-market selloffs and surveys of sentiment, are imperfect forecasters of a recession. But the hard economic numbers that more accurately predict a slowdown are lagging indicators, so they often just confirm what everyone already knows. This matters a lot right now.

Early indicators have more credibility when several of them are flashing warning lights, which is true now. Besides the stock market turmoil, short-term Treasury yields are almost as high as long-term yields, closing in on a yield curve “inversion” that in the past has portended recession.

Corporate bond yield spreads over comparable Treasurys are climbing. Business sentiment is slipping, with nearly half of chief financial officers in a recent Duke University survey forecasting a recession by the end of next year.

True, one or more of these may turn out to be wrong. The flattening yield curve, for example, could be a result of bond buying by central banks. But these indicators tend to reinforce one another, so if markets get worse, investors should be more nervous.

The next thing to watch are the most real-time of the lagging indicators. Among them, economists at Bank of America Merrill Lynch point to initial jobless claims, auto sales, industrial production and aggregate hours worked. Of these, only auto sales, which have leveled off lately, provide any concern.

The others are sending an all clear, with jobless claims near multidecade lows, industrial production at a record high and aggregate hours—the combined amount of time Americans are spending on the job—growing steadily.

u.s. economy

Today’s Stock Market News

Another good recession indicator, according to Goldman Sachs, is economists’ recession forecasts. This isn’t as silly as it sounds. Economists as a group may never correctly predict a recession, but the odds they place on one coming tend to rise in advance of a downturn.

This is what has happened: This month, economists surveyed by The Wall Street Journal put a 22% chance of a recession occurring over the next 12 months, compared with 14% a year earlier. Those odds would need to go higher before they amounted to a danger sign. In September 2007, three months before the last downturn began, economists’ recession odds were at 36%.

Before relaxing too much, the other thing to know about recessions is that they can start fast. Before the fall of 2007, recession indicators like jobless claims suggested nothing was seriously amiss, and then suddenly, they did. With the boost from last year’s tax-cut stimulus about to fade, the lagged effects of the Federal Reserve’s rate increases starting to take hold and fractious geopolitical environment, investors should acknowledge the blue skies overhead but also keep an eye on the horizon.


Categories: Economic Indicators, Stock Markets

Tags: , , , , , , ,

27 replies


  1. The plummeting stock market is signaling a serious slowdown, if not a recession… But the economy can turn quickly… – Stock Trading NTS
  2. U.S. stocks have dropped sharply in recent weeks on concerns over weaker economic growth. Trump has largely laid the blame for economic headwinds on the Fed – Stock Market News Today
  3. China’s industrial profits suffer first drop in three years. Economists expect earnings to continue to worsen next year – Stock Market News Today
  4. Apple will begin assembling its top-end iPhones in India through the local unit of Foxconn as early as 2019 – Stock Market News Today
  5. U.S. consumer confidence posted its sharpest decline in more than three years in December – Stock Market News Today
  6. Apple Inc. has lost more than $9 billion this year on an underperforming investment—its own stock – Stock Market News Today
  7. Global stocks rallied on Friday, adding to a week of seesaws on Wall Street that captured the uncertainty gripping investors heading into 2019 – Stock Market News Today
  8. Investors should be careful as the recent spike in market volatility is far from normal, according to the manager of the California State Teachers’ Retirement System – Stock Market News Today
  9. Volatile financial markets and softer economic data has led Goldman Sachs to trim its expectations for growth in 2019 – Stock Market News Today
  10. Activity in China’s manufacturing sector contracted for the first time in more than two years in the month of December – Stock Market News Today
  11. Oil prices rose on the final day of the year, mirroring gains in stock markets – Stock Market News Today
  12. After bitcoin slumps 70% in 2018, the digital currency’s fans look for a rebound – Stock Market News Today
  13. Global Stocks Open 2019 With a Tumble Over Weak Chinese Data – Stock Market News Today
  14. U.S. manufacturing activity slowed sharply to a two-year low in December amid a plunge in new orders and hiring at factories – Stock Market News Today
  15. Global stocks climbed Friday, staging a partial rebound from Thursday’s steep losses – Stock Market News Today
  16. Netflix represents one of the most compelling investments available in the internet space, according to Goldman Sachs – Stock Market News Today
  17. Goldman Sachs downgraded its oil price forecasts for 2019, citing a surge in global production and surprisingly resilient U.S. shale growth – Stock Market News Today
  18. U.S. services sector activity slowed to a five-month low in December – Stock Market News Today
  19. Mortgage rates have fallen to around their lowest levels in eight months, offering a potential boost to the housing market after a rough patch in recent months – Stock Market News Today
  20. China to set lower GDP growth target of 6.5 percent in 2019, as Beijing gears up to cope with higher U.S. tariffs and weakening domestic demand – Stock Market News Today
  21. U.S. Recession Risk Hits Six-Year High. Analysts surveyed by Bloomberg over the past week see a median 25 percent chance of a slump in the next 12 months – Stock Market News Today
  22. Inflation: what methods can the government use to control inflation? – Stock Market News Today
  23. Wall Street traders for years complained that they couldn’t make money in calm markets. They haven’t fared any better in wild ones – Stock Market News Today
  24. BlackRock, the world’s largest money manager, announced job cuts this month after the worst year for many stock indexes since the financial crisis – Stock Market News Today
  25. The last time many global stock indexes rose this quickly was in January 2018—when markets around the world rallied, only to tumble in February – Stock Market News Today
  26. As The Stock Market Rallies On US-China Trade Hopes, Bond Investors May Be Worried About A Recession – Today’s Stock Market News
  27. As The Stock Market Rallies On US-China Trade Hopes, Bond Investors Be Worried About A Recession – Today’s Stock Market News

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: