Hoisington Management’s latest Q4 quarterly review and outlook is now available here.
With some risk markets still drunk on blind optimism, the list of recessionary indicators grows longer by the day. Real-world facts always matter in the end. Hoisington summarizes some of the most historically prescient data to date:
Over the past year, inflation, real GDI, hours worked of all non-agricultural employees, national saving, delinquencies, foreclosures and bankruptcies portrayed a recessionary environment even though real GDP and payroll employment continued to rise. Key indicators, derived mainly from industry sources rather than the government statistical mill, exhibited characteristics of a hard landing. New vehicle sales, new home and existing home sales, respectively, were 15%, 43% and 42% below their peak levels of the past five years.
Prescient cyclical indicators point to an expanding list of recessionary conditions. Not only did the long-running inversion of the yield curve persist through the fourth quarter, but it also became even steeper. A prolonged drop in the index of leading economic indicators was extended. The high multiplier manufacturing sector moved further below its cyclical peak reached last October and the deep drop in world trade volume has never happened without a global recession since the series originated in 1992.
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