Essentially, the ISM Index came in at 41.9 in January,from 54.4 the previous month. What does this mean?
The Institute for Supply Management's non-manufacturing index reflects almost 90 percent of the US economy. This is the lowest since October 2001. A reading over 50 signals expansion, but under 50, it signals recession.
"This is a stunning fall,'' said Michael Moran, chief economist at Daiwa Securities America Inc. in New York. ``If accurate, it's dire news on the economy.'' (see here)
Numbers came in today at 41.9, signaling a recession. You can actually see the reaction in Asia as the Nikkei stock market is down 557 so far, coming in at 13,187 currently. The ISM shows us that we are gearing towards less growth, with that looming 'R' word on the horizon.
What will the Fed do? Another rate cut? (They only have so many of those) What about beefing up the stimulus package?(Free money....right?)
Consumers are now having to tighten their belts and actually pay as they go...what a concept! We'll see if this has a long-term effect; the consumer entitlement mentality in America is too well-ingrained to be ironed out after an economic hiccup. However, those with cash are going to find some sweet deals (think big, really big). Just hop on craigslist, and type in 'foreclosure' and see what pops up.
Cheers!
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