Mixed (Economic) Messages, Credit Concerns & Screen Stats

MODERATING MANUFACTURING

Global manufacturing sentiment fell to 49.8 in May from 50.4 in April. Not only was this the 13th straight monthly decline in the index and the weakest reading since late 2012, but readings below 50 suggest declining activity! Closer to home, the US manufacturing sentiment index fell to 52.1 in May, its lowest reading since 10/16, and well below its high of 58.8 six months ago. Recession risks are rising.

DOWNTURN DATA

Among many, there is a belief that economic expansions behave like people. That is, the longer an economic recovery, the greater is the probability of a recession. This is based on the fact that older persons are, all else equal, more likely to die than younger persons. Except expansions don’t behave that way. The chances of a recession occurring are totally uncorrelated with the length of the preceding expansion.

PASSABLE POSITIONS

With 75,000 net new jobs in May, and downward revisions totaling 75,000 for March and April, job growth is demonstrably slowing. Additionally, Y-o-Y wage growth fell to 3.1%. This makes a July rate cut very possible. However, the unemployment rate remained at 3.6% and the broadest measure of unemployment fell to 7.1%; best since 12/2000. YTD job growth of 150K is fine, so long as it doesn’t weaken much further.

CRUMMY CARDS

Credit card delinquency rates hit 8.1% in 19Q1, the highest rate in years. While rates are rising slowly for card holders over 30, rates are up sharply for those 18-29. Highest interest rates in decades are partly to blame, but the Card Act of 2009 caused a steep decline in accounts among those 18-29. Since bottoming in 2012, credit card prevalence in that group has steadily risen, along with defaults.

TV TROUBLES

Since 2014, thanks to cord-cutting due to streaming services, non-sports TV viewership has declined 11% at NBC to 6.8 million persons, 22% at CBS to 8.3 million, 25% at ABC to 5.9 million, and 27% at Fox to 4.2 million. Despite these precipitous drops, 2019 ad spending will decline just 1.4% from 2018, probably because streaming services like Netflix and Amazon show no ads and Disney+ plans to be ad-free.

SUMPTUOUS STEAK

2.5% of Americans order steak rare, 22.5% request theirs medium-rare and 37.5% ask it be medium. Medium-well is requested 25.8% of the time, and well done 11.7%. The cut grilled least, prime rib with almost 40% of diners ordering it rare or medium-rare. Chefs consider steak with an internal temperature of about 120 degrees Fahrenheit rare, 140 degrees medium, and 155 degrees well done.

Source: Elliot Eisenberg, PhD., Chief Economist for GraphsandLaughs, LLC, an economic consulting firm serving a variety of clients across the United States. All rights reserved.

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