The well-known economist who accurately predicted the 2008 housing crisis, says America is in a recession, albeit a mild one.
Gary Shilling, the economist and financial analyst, thinks the United States is in the middle of a slight recession.
& # 39; I think we are probably already in a recession, but I think it will probably be an everyday event, meaning that real GDP will fall by 1.5% to 2%, not 3.5% to 4 per cent that you had in the very severe recessions, & said Shilling, who is president of A. Shilling & Co.
Although the stock market may not fall into a free fall like other more severe recessions, it is likely to fall somewhat, Shilling said.
In an interview with Real vision, he predicted that stocks would fall around 22 percent.
Gary Shilling, the economist and financial analyst, thinks the United States is in the middle of a slight recession
Shilling says the current recession can be attributed to a fall in industrial production and a slowdown in the global economy.
Aggravating matters are the Trump government's trade war with China.
In bad news for the economy, US consumer confidence plummeted to a low of 21 months in June as households became a little more pessimistic about business and labor market situations amid concerns about a recent escalation of trade tensions with China.
The outlook for the economy was further dimmed by other data on Tuesday, showing that sales of new single-family homes fell unexpectedly for a second month in a row in May.
Increasing risks to the economy, particularly in connection with the Washington-Beijing trade war, and low inflation prompted the Federal Reserve last week to declare interest subsidies as early as July.
& # 39; The headwind of the ongoing trade war that the economy is facing will certainly become stronger and it will be a miracle if Fed officials pull a rabbit out of their hat and help the economy move forward & # 39 ;, says Chris Rupkey, chief economist at MUFG in New York.
The Conference Board said the consumer confidence index fell 9.8 points this month to a value of 121.5, the lowest since September 2017, from a downwardly revised 131.3 in May.
This month's fall in the index was the largest since July 2015.
The index, previously reported at 134.1 in May, is still at a high level, indicating that consumer spending is still supported.
The Conference Board accused the decline in trading tensions and warned that persistent uncertainty might even reduce consumer confidence in expansion at any given time.
The economy will mean 10-year growth next month, the longest growth ever recorded.
President Trump imposed additional rates of up to 25 percent on $ 200 billion worth of Chinese goods last month, causing Beijing to retaliate.
Trump has threatened with more import duties on Chinese imports if no deal is reached at a meeting of the Group of 20 Nations in Japan this week.
Economists questioned by Reuters had predicted the consumer confidence index at 131.1 in June.
The Conference Board survey showed a decline in the proportion of consumers with a favorable assessment of business conditions this month.
The so-called & # 39; labor market difference & # 39; of the survey, derived from data about respondents who think jobs are difficult to get and those who think jobs are plentiful, fell to a low of 27.6 percent in June, compared to 33.5 percent in May.
This measure is closely related to the unemployment rate in the employment report of the employment office.
& # 39; The shift we see here in plentiful jobs is alarmingly reminiscent of what we saw late in previous cycles & # 39 ;, said Tim Quinlan, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.
Tensions in trade with China are also blamed for some data indicating a slowdown in the economy. President Trump can be seen in the White House on Wednesday
& # 39; If patterns from the past are right, without a turnaround in this series, job growth could slow down in the coming months. & # 39;
The economy created 75,000 jobs in May, a sharp drop of 224.00 in April.
The lukewarm job gains of last month were largely seen as an anomaly, as an important indicator for the labor market, weekly claims for unemployment benefits, remains low.
Job growth this year amounted to an average of 164,000 a month compared to 223,000 in 2018.
The rate of employment growth, however, remains well above the approximately 100,000 needed per month to keep pace with the growth in the working age population.
The unemployment rate floats close to a 50-year low of 3.6 percent.
The dollar was trading higher against a basket of currencies, while US Treasury prices were mixed. Shares on Wall Street were trading lower.
The growth of the gross domestic product in the second quarter varies from 1.5 percent to 2.4 percent on an annual basis.
The economy grew by 3.1% in the first quarter.
The slowing growth was underlined by a separate report from the Commerce Department last Tuesday, with new home sales down 7.8 percent to a seasonally adjusted annual rate of 626,000 units in May, the lowest in five months.
The April sales rate was adjusted to 679,000 units from the previously reported 673,000 units.
Economists had made a forecast for the sale of new homes, which represent around 10.5% of sales in the housing market and which rose by 1.9% in May to 680,000 units.
The sales of new homes are derived from permits and are generally fluctuating on a monthly basis.
Turnover fell 3.7 percent compared to a year ago.
The Dow Jones Industrial Average finished more than 11 points on Wednesday
The housing market has remained slow, while mortgage rates have fallen, while builders continue to complain about shortages of land and labor.
The rates on Chinese imports are also disturbing home builders.
Lennar Corp., US homebuilder No. 2, said on Tuesday that the effect of tariffs on Chinese goods in the second quarter resulted in a headwind of around $ 500 per property, which ended on May 31.
The housing data is generally mixed. Last week's reports showed that the start of single-family homes had dropped in May, but building permits for this market segment recovered after five consecutive monthly declines and the resale of the house increased solidly.
Sentiment among builders baptized in June.
A third report from Tuesday showed that the S&P CoreLogic Case-Shiller composite house price index in 20 metropolitan areas rose 2.5 percent in April on an annual basis after a 2.6 percent increase in March.
House price inflation has slowed after the rise in mortgage rates last year dampened demand for housing.
& # 39; A slowing economy will limit housing demand, meaning that house price increases will decrease to around 2 percent on an annual basis by the end of this year, said Matthew Pointon, real estate economist at Capital Economics in New York.
& # 39; We doubt that lower interest rates mean that housing demand will continue to rise.
& # 39; Sentiment when buying a home is moderate and the banks no longer loosen the credit rating. & # 39;
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