Tumbling Down

I have to keep it short as medical issues got in the way of writing time, but I’d like to point out a few things from the news headlines below.

Economist David Rosenberg, who predicted the 2008 financial collapse, said that the 818,000 adjustment in new jobs that I wrote about here on The Daily Doom signify an economy that is in a worse meltdown than the Fed realizes.

The Bureau of Labor Statistics said the jobs growth data from March 2023 to March 2024 was actually 30 percent less than its initial figure of 2.9 million, a devastating blow Rosenberg says may spell doom in the near future….

Fed policy 'has been too tight, and for too long, to avoid causing an economic slowdown,' he wrote last week in a client-circulated note obtained by Business Insider….

'Incredibly, the Fed raised rates 500 basis points under a false presumption - by over one million - of just how robust the jobs market was,' Rosenberg wrote.

That is the broken labor metric that I’ve warned about for a few years here, whereby I’ve said the Fed would tighten us deep into recession because the numbers it is going by to judge the economy’s eventual downturn under Fed tightening are badly broken. Rosenberg agrees.

Rosenberg has been warning that the US is on the brink of recession over the last couple of years, but has gotten especially vocal in 2024 about his fears.

Rosenberg had noted earlier that the job revisions he believed were certain would come as a shock to Fed, confirming my statement that they’d be blindsided by this. Rosenberg also points to a couple of other economic models that say the US is likely already in recession. He believes the Fed is now acting too late to contain the damage that will be caused by tightening for too long.

Corresponding to Rosenberg’s claims, another report —the Conference Board Survey—shows we are now in the weakest labor market since the Covid lockdowns.

Conditions have clearly fallen quite a ways.

Finally, the Dallas, Richmond and Philly Fed surveys provided the following kinds of statements about the economy by business owners:

• "Honestly, I do not think this economy can withstand the ravages of what it has experienced since 2021."

• I feel that a recession is going to hit the U.S.

• People are out of money. They're parking their cars and throwing their keys to the dealership or banker, as it’s car or food for the family. And worst of all, I think it has just begun.

• In my 15 years at this location, this summer has been the worst