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Monday, April 13, 2015

US Economy in Recession

The US economy is now firmly in recession despite what the TV Talking Heads tell us.

More evidence of this fact comes from the National Association of Credit Management (NACM), whose latest report reveals:

"We now know that the readings of last month were not a fluke or some temporary aberration that could be marked off as something related to the weather," said NACM Economist Chris Kuehl. "These readings are as low as they have been since the recession started and to see everything start to get back on track would take a substantial reversal at this stage."

The combined score of 51.2 is moving dangerously close to contraction zone. The index of favorable factors dropped to 55.4 while the unfavorable factors drastically fell to 48.5--a place this index has not seen since after the end of the recession. "The signal this sends is that many companies are not nearly as healthy as it has been assumed and that there is considerably less resilience in the business sector than assumed," said Kuehl.

Most categories showed decreases this month, but the real damage occurred in the unfavorable changes categories. According to Kuehl, the most disturbing drop happened in the rejection of credit applications category, which fell from 48.1 to an even weaker 42.9. The accounts placed for collection fell to 49.8, disputes improved slightly to 49, dollar amount beyond terms fell to 45.5, and dollar amount of customer deductions dropped to 48.7.

"The year-over-year trend remains miserable and seems to be getting worse and thus far nearly all the blame can be laid at the feet of credit access," Kuehl said. "There is just not a lot of confidence in those that are doing the credit offerings these days."