Moneymoneyrcwrttrumprecession

Wed Oct 9, 2019, 12:14 PM

Eroding Profit Margins Will Push U.S. Into Recession in 2020, Leading Forecaster Says

Stephen Gallagher of SocGen is not blaming tweets, Trump or tariffs

Published: Oct 9, 2019 9:00 a.m. ET
By REX NUTTING
COLUMNIST

Stephen Gallagher stands out among Wall Street economists because he’s one of the few willing to go on the record to forecast a recession in 2020. Also because he’s not blaming it on tweets, Trump or tariffs.

The chief U.S. economist for Societe Generale also stands out because he’s just won MarketWatch’s Forecaster of the Month contest, which we designed to recognize the most accurate U.S. economic forecasters.

Gallagher’s recession story is a relatively simple one: U.S. recessions are typically preceded by an erosion in corporate profit margins, or profit per dollar of revenue. Costs generally rise near the end of the cycle while sales flatten out.

Profit margins for U.S. nonfinancial corporations peaked in 2015 at 15.2% of gross value added, and have fallen to 10.9% in the latest quarter.

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Cost-cutting

Since few corporations have any pricing power, the only way for managers to defend their margins against higher labor costs is to turn defensive, focusing on cost-cutting instead of growth. Once companies begin to reduce investment and payrolls, it’s only a matter of time before consumer spending stalls.

more...

https://www.marketwatch.com/story/eroding-profit-margins-will-push-us-into-recession-in-2020-leading-forecaster-says-2019-10-08?mod=mw_theo_homepage

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Reply Eroding Profit Margins Will Push U.S. Into Recession in 2020, Leading Forecaster Says (Original post)
RCW2014 Wednesday OP
Da Mannn Wednesday #1
quad489 Wednesday #2
Da Mannn Wednesday #3
RCW2014 Wednesday #5
GoldwatersSoul Wednesday #4
uncledad Wednesday #6

Response to RCW2014 (Original post)

Wed Oct 9, 2019, 12:40 PM

1. I can see RC praying to Putin, "Please! Please! Please!"

Lefty fantasy land.

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Response to Da Mannn (Reply #1)

Wed Oct 9, 2019, 12:45 PM

2. It's sad to see so many dem-lefties wishing for this country to go into a recession..............

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Response to quad489 (Reply #2)

Wed Oct 9, 2019, 12:48 PM

3. impeachment isn't working, this may be their only chance.

It is not like they have any candidates capable of winning.

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Response to Da Mannn (Reply #1)

Wed Oct 9, 2019, 02:24 PM

5. Off to my ignore list with you too. Sick of 5th grade antics.

You post nothing of interest to me anyways.

Bye.

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Response to RCW2014 (Original post)

Wed Oct 9, 2019, 01:28 PM

4. Do you know the fundamentals...

Of how the recession could happen??? I do.

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Response to RCW2014 (Original post)

Wed Oct 9, 2019, 05:34 PM

6. The slow down is speeding up...

Compared to the first six months of 2018, the economy in the first half of 2019 grew just 1.6 percent, a pronounced slowdown relative to the 3.9 percent growth between the first half of 2018 and the first half of 2017.

Residential investment contracted at a 1.5 percent rate, and this sector has contracted for 18 months straight. The last contraction of housing construction that lasted this long began in the Great Recession.

Nonresidential fixed investment (NRFI—or business investment), saw a large contraction as well, with investment in structures falling at a 10.6 percent rate. This represents the third time in four quarters this type of investment has contracted.

https://www.epi.org/press/investment-spending-crumbles-in-second-quarter/

The global economy is contracting. Cost cutting by slowing hiring and reorganizing employee-management ratios are happening now.

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