US Already In Recession, Here Comes the Taper

The Fed is trapped six ways to Sunday.

Bloomberg: U.S. Is in Recession If History of Consumer Sentiment Repeats

In the research dated Thursday, David Blanchflower of Dartmouth College -- who set interest rates at the BOE during the 2008 financial crisis -- and Alex Bryson of University College London say that consumer expectations indexes from the Conference Board and University of Michigan tend to predict American downturns 18 months in advance.

“However, downward movements in consumer expectations in the last six months suggest the economy in the United States is entering recession now,” they added.

Eighteen months being from the March 2020 lockdown.

I would be skeptical of this data point except for the fact that the Atlanta Federal Reserve's GDP Now model has fallen off a cliff. The Atlanta Fed was reliable a few years ago, but has been less reliable with all the disruption in the economy. I took the drop in GDP forecast with a grain of salt. Seeing this forecast from consumer sentiment adds a data point that says the Atlanta Fed might be on to something. Note that the Atlanta Fed's forecast of 1.3 percent GDP growth is for Q3 and it is based on incoming data, so that's not including a chunk of September data. Some August data sets only came out a week ago. In other words, if the Atlanta Fed is in the ballpark and the trend hasn't abated, it is possible GDP growth is already negative. We might get some more corroborating or contradicting data very soon because third quarter earnings season kicks off later this week.