Price Indexes Say A Recession Is Not Close

This week we saw (finally) the price indices for February 2019 consumer prices, producer prices, and import prices. All showed low inflation, and generally downward trends.

What is interesting is that historically recessions have not occurred when the rate of inflation slows (or is low).

January New Home Salesslowing economy on spending

The headlines say new home sales declined and continues in contraction. Median and average sales prices marginally declined - and the backlog of unsold homes declined.

This month the backward revisions were sometimes significantly upward. Because of weather and other factors, the rolling averages are the way to view this series. The rolling averages improved but remains in contraction.

February Industrial Productionevidence of a slowing economy

Although the headlines say seasonally adjusted Industrial Production (IP) improved month-over-month, the manufacturing component of industrial production significantly declined (only up 1.0 % year-over-year). Even looking at all three components of Industrial Production (manufacturing, mining, and utilities), the three month rolling average declined.

January JOLTSslight slowing in the rate of growthJob openings marginally declined. The unadjusted data this month showed about average rate of growth that was seen in the last year. However, the decline is so small that it is difficult to believe there will be much effect on employment.Surveysmixed

NFIB Small Business Optimism improved modestly. This indicator remains below most values seen in the last two years.

Empire State Manufacturing - With both the main index and key indices declining, this was a worse report than last month.

The preliminary University of Michigan Consumer Sentiment for March came in at 98.7 - up from the final February preliminary of 93.8 - and up from the January final of 91.2. According to the authors of this index: "The early March gain in sentiment was entirely due to households with incomes in the bottom two-thirds of the distribution, whose sentiment rose to 97.4 from 90.0 in February. Sentiment fell among households with incomes in the top third to 98.5 in early March from 101.7 in February."

Weekly Rail CountsDefinitely not positive newsRail so far in 2019 has changed from a reflection of a strong economic engine to contraction. Currently, not only are the economic intuitive components of rail in contraction, but the year-to-date has slipped into contraction.

This week the data is mostly showing a slowing economy - but still, there is little to indicate that a recession is waiting in the wings.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.