I have been catching up on some sleep since returning from a 5 week stint drilling a few oil wells up in northern Alberta and have been a little lazy on blog posts, mostly because I have been lazy on reading through material for ideas. Later this week I plan on posting a US Economy review, but I realized I had saved a few charts that are flashing warning signs.
The first chart shows that corporate loan growth is slowing. A peak and then significant decline in this metric has been associated with previous recessions.
Declines in sales by wholesalers usually only declines during recessions.
The Baltic Dry Index, which is a measure of shipping costs – hence a proxy of shipping demand – had a large run up after the Trump election but has declined quite dramatically on the fears of global trade wars.
Continuing claims for employment insurance has been in a downtrend since early in the Obama Administration. These claims have a good track record of turning higher prior to recessions. Currently they are at a level that has been consistent with a bottom.
Albert Edwards of Societe Generale published this chart showing that global inflation rates have been trending higher.
Rising rates of inflation spur the FED to raise rates and recessions tend to arrive at the end of rate rising cycles (although we are still early in this cycle).
Although there are warning signs on economic growth, my favourite indicator is still trending higher. I still believe that any recession is comfortably off in the future, but some of these warnings should make us pay attention.