SubscribeChicago PMI Indicates Contracting Economy
The sugar high may be wearing off sooner then I expected.
A measure of U.S. business activity unexpectedly shrank in September, indicating companies are likely to limit spending and production.
The Institute for Supply Management-Chicago Inc. said today its business barometer decreased to 46.1, worse than the lowest estimate of economists surveyed by Bloomberg News, from 50 in August. Readings below 50 signal contraction.
Near-record excess capacity and gains in spending induced almost solely by government stimulus programs are likely to prevent companies from ramping up assembly lines. The manufacturing recovery may be uneven as federal assistance begins to wind down.
“Conditions are still very sobering,” said Ellen Zentner, a senior macro economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “There’s always a payback period on the other side for government stimulus.”
My comment: Taking money from Peter to pay Paul can only give the illusion of a rebounding economy. How anyone thinks 25 plus years of excess will be cured in one or two years is beyond me. Things will continue to worsen as we are nowhere near the bottom. if you are speculating in the stockmarket you should be very wary of the economic underpinnings so many are betting on.
John Polomny
The Real Deal
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