Reading Tea Leaves on the Economy

I tend not to read too much into the chicken entrails that economists call “indicators,” because as the old saying goes, economists have predicted nine of the last four recessions. But it is a fact of economic life that all economic expansions eventually come to an end with a recession, and the current economic expansion is the second-longest on modern record, and soon to become the longest. The deliberate slowness of it under President Obama may mean this one can run longer, but it is best to remain agnostic. Especially about the future.

One set of current numbers does catch my eye, however. While overall employment and industrial output numbers remain strong, consumer confidence has tanked in the last month and a half, as tracked by the major surveys (as reported by the good folks at The Daily Shot):

And retail sales have slipped:

Could the government shutdown explain some of this? I have no idea. But given that the American consumer is still a major driver of overall economic activity, we should attach a warning flag to this. In the meantime, one of the major “macro” models that track the probability of recession is rising while another is falling, so go figure. The hazard for Trump’s re-election chances are obvious however.

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