“It’s the economy, stupid,” a slogan James Carville coined as a campaign strategist of Bill Clinton’s successful 1992 presidential campaign against sitting president George H. W. Bush. So where are we at in terms of the U.S. economy heading into the U.S. 2020 presidential elections?
As a backdrop to the recent data dump of PMI reports (click here), the trade war rages on, though there is some movement on more talks. However, the odds are that this trade war progress goes nowhere – the Chinese are waiting for the 2020 presidential elections to make a deal. Brexit turmoil also rages on – see here for our view on the eventual outcome. On the political scene, the Trump impeachment potential inquiry dominates the news cycle – for now, it is not significantly affecting the economy, though this could change.
It is the first of the month, and the Purchasing Managers’ Index (PMI) and ISM (Institute for Supply Management) reports for September 2019 are available – see inset chart. The headline was that the U.S. ISM was a weak report, causing markets to jolt negative on the Dollar and Equities. Eurozone continues to sink, Germany reporting the worst PMIs since 2009. Europe is virtually in a recession. China still holding near-stagnation level, though a slight blip upward, despite the trade war issues they are experiencing.
On the positive side, the September unemployment rate falls to 3.5%, a 50-year low, as payrolls rise by 136,000. But keep in mind that employment is a lagging economic indicator.
Looking at the global JPMorgan PMI report, the global economy is on standby mode in stagnation. News Forecasters asks, where do we go from here? If you have liked September, you will like October – more stagnation. Many believe during this October period that we could have a market shock – sometimes this happens in October. For those hoping for this, maybe disappointed – unless an unrelated trigger event should occur (i.e., natural disaster, political, etc …). Keep your eyes open.
A video presentation of this subject: