Home' Trinidad and Tobago Guardian : February 8th 2016 Contents A16
Guardian www.guardian.co.tt Monday, February 8, 2016
INTEGRA SECURITY LIMITED
MALE SECURITY OFFICERS
IN THE EAST AND WEST
WEEKLY CASH PAYMENT
TARTING AT $20.00 PER HOUR
• Between the ages of 18 ? 55 years of age
• Must weigh between 180 ? 230 lbs
• Must be physically fit
• Have excellent communication and
• Possess a Police Certificate of Good
• Candidates considered for hire are required to
pass a background check
FOR FURTHER INFORMATION CALL 291-5876 AND/OR 296-0942
WASHINGTON--- US manufac-
turing is shrinking, corporate
profits are declining and goods
are piling up on warehouse
shelves. Those trends have ele-
vated concern that a US recession
may loom in the next year or two.
Yet in the one area that matters
most, the economy has continued
to shine: Hiring.
Last month, employers added
151,000 jobs, a tepid pace by recent
standards but still enough to help
cut the unemployment rate to a
nearly eight-year low of 4.9 per
Over the three months that
ended in January, hiring has aver-
aged a robust 231,000 a month.
Such a trend typically reflects
an economy in prime health, not
one nearing a recession.
"It doesn t feel like to us that
the economy is in a bad place,"
said Michael Hanson, an econo-
mist at Bank of America Merrill
Lynch, said. "It would take a very
big shock to make a recession case
much more likely."
Most analysts say that while the
economy may slow this year com-
pared with 2015, an outright reces-
sion remains unlikely. Hanson puts
the odds of a recession within the
next 12 months at 20 per cent.
While still low, that estimate is up
from 15 percent last year.
Here are three trends that point
to a potential recession --- and three
that do not:
No doubt factory output is
declining. A jump in the value of
the dollar and sluggish economies
in Europe, China and Japan have
squeezed exports of US goods.
The Institute for Supply Man-
agement s manufacturing index
has been below 50 for four months,
signaling contraction. Orders for
factory goods plunged in 2015 ---
the first annual drop since 2009,
when the economy was just
emerging from recession.
And industrial production, as
measured by the Federal Reserve,
fell 1.8 per cent in December from
a year earlier. That was the steepest
drop since 2009.
A weak manufacturing sector
can be a harbinger of recession.
That s because Americans tend to
reduce purchases of costly man-
ufactured items, such as appliances
or electronic products, before they
start cutting back on more basic
Still, manufacturing now
accounts for only about 10 per cent
of the US economy, a small enough
proportion that a factory slowdown
probably won t derail the rest of
And manufacturers added
29,000 jobs last month, a surpris-
ingly solid total. That suggests that
factories that don t depend on
exports may still be doing OK.
A classic recession indicator
occurs when companies stock
more items than people are willing
or able to buy. Those companies
then must slash new orders and
prices to clear the backlog. This
lowers production and profits.
In December, US stockpiles
reached 1.38 times sales --- the
highest level since July 2009, a
month after the Great Recession
officially ended. Some analysts
estimate that the overstocking
shaved one-half a percentage point
off growth in the October-Decem-
That s a key reason the economy
grew at an anemic 0.7 per cent
annual rate in the final three
months of 2015.
Yet consumers and businesses
are still spending, and that should
enable companies to work off their
excess supplies, says Nariman
Behravesh, chief economist at IHS,
a forecasting firm.
One of the most reliable reces-
sion indicators in the past has been
a drop in longer-term interest rates,
such as the yield on a 10-year
Treasury, along with a rise in
shorter-term rates, such as the
yield on a three-month Treasury.
When longer-term rates fall
below short-term ones, it produces
what Wall Street analysts call an
"inverted yield curve." It s a sign
that investors expect the economy
to slip into recession and lead to
lower long-term rates.
According to an analysis by
economists at Bank of America
Merrill Lynch, historically the yield
curve has been one of the most
accurate predictors of recessions.
It has flattened in the past month:
The 10-year Treasury yield has
sunk from 2.3 per cent to 1.8 per
But with the Fed pegging its
short-term rate at between 0.25
per cent and 0.5 per cent, most
other short-term rates also remain
very low. So the yield curve has
not inverted. Analysts at Bank of
America Lynch say it s showing
just a 20 percent chance of reces-
sion over the next 12 months.
Other analysts are a bit more
worried. Guy LeBas, chief fixed
income strategist at Janney Mont-
gomery Scott, says the bond mar-
ket has reacted more sharply to
recent signs of an economic slow-
down. That suggests that investors
are more concerned about the U.S.
economy, rather than simply react-
ing to weakness in places like
Most economists still see a
recession this year as unlikely.
Here are three reasons why:
Though economic growth weak-
ened in the final three months of
last year, businesses kept on adding
jobs. That means more Americans
are earning paychecks to spend.
And while average wage levels
are growing only slightly, there are
signs that the steady pace of job
growth is compelling companies
to pay more to attract employees.
Average hourly wages rose 2.5 per
cent in January compared with a
year ago, a brisk advance from the
weak two per cent trend that s pre-
vailed since the recession.
That means consumer demand
--- the US economy s lifeblood ---
will likely stay sound.
As the saying goes, recessions
typically don t die from old age.
Instead, there s usually a trigger
that kills them. And most of the
usual suspects aren t evident.
A stock-price bubble helped tip
the economy into a recession in
2001. A housing bubble triggered
the deep 2008 downturn. Yet by
most measures, neither stocks nor
housing are nearly as overpriced
as they were then.
The Federal Reserve has fre-
quently been blamed for causing
recessions by raising rates too
quickly. And while it boosted its
benchmark short-term rate in
December for the first time in nine
years, most economists forecast
that it will raise rates very slowly
this year, if at all.
Finally, sharply higher oil and
gas prices have preceded or
accompanied every recession since
the 1970s. But oil prices right now
"Those traditional recovery-
killers just aren t there," Behravesh
Investors are worried about
much slower growth in China,
where many American multina-
tionals have invested a lot of
money. Yet few American con-
In this April 22, 2015 photo, Ralph Logan, general manager of Microtrain, left,
speaks with James Smith who is seeking employment during a National Career
Fairs job fair in Chicago. For months, US employers have steadily added jobs even
as global growth has flagged and financial markets have sunk. AP PHOTO
US jobs report helps ease
concerns a recession
might be nearing
sumers share that concern.
Instead, consumer confidence rose
in December, according to the Confer-
ence Board, a business research group,
despite some volatility in the stock
market that month.
With low gas prices leaving more
money in consumers wallets and bor-
rowing costs low, most economists
expect Americans to spend at a decent
pace this year and bolster economic
Sales of new homes surged in
December to the healthiest level in 10
months. Sales of existing homes rose
6.5 per cent during 2015, though that
pace is expected to slow a bit this year.
"Why would the consumer stop
spending?" Behravesh asked. "They
don t care about China." (AP)
Links Archive February 7th 2016 February 9th 2016 Navigation Previous Page Next Page