How's That Recession Coming?

Summary

• Most economic indicators this year have moved relentlessly in the direction of recession, and now the Cass Freight Index is saying a US recession may start in the 3rd quarter, fitting up nicely to my prediction that we would be entering recession this summer.
• Whether I prove right about recession starting in the US this summer once GDP stats come in months from now and then get their normal downward revisions months after that, one thing is certain: recession definitely became the headline news this summer and a sudden big concern for the Fed and for the president and for consumers who follow the Fed.
• Almost everything in the news now fits my statement a few months ago that there would be no good news left in the pipeline for the stock market after the Fed's first rate cut.

Editor's note: Edits were made to this article.

Pretty good if you ask me. Most economic indicators this year have moved relentlessly in the direction of recession, and now the Cass Freight Index is saying a US recession may start in the 3rd quarter, fitting up nicely to my prediction that we would be entering recession this summer.

Cass comes on board

The Cass Freight Index is one of the most robust proxies for the US and global economies there is. If freight isn't moving, the economy is dying. As Cass says, there is a simple, fundamental approach to encapsulating the economy:

"As we try to navigate the ebb and flow of the economy, we don't pretend to have any 'secret sauce' or incredibly complex models that have exhaustively analyzed every data point available. Instead, we place our trust in the simple notion that the movement of tangible goods is the heartbeat of the economy, and thattracking the volume and velocity of those goods has proven to be one of the most reliable methods of predicting change because of the adequate amount of forewarning that exists."

Cass Freight Index Report

The Cass Freight Index has now been negative for eight months, marking 2019 as a year of recessionary decline. Cass Information Systems notes they have been highly reserved in stating the index reveals a recession is now because the index periodically goes negative without the US going into recession, but they also note the weakness has rarely gone as deep as this time or spanned so many modes of transportation.

"We are concerned about the severe declines in international airfreight volumes (especially in Asia) and the ongoing swoon in railroad volumes, especially in auto and building materials."

Are not Carmageddon and a new housing crisis two areas I have been