Market Commentary

Factory Output

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The U.S. economy is dominated by the service sector with the factory sector contributing about 10 to 15% of the GDP. The consumer is the driver compromising 66% of the entire GDP in the U.S. As long as the consumer is working, having money in their pocket and spending that money, the U.S. economy will thrive.

Looking for evidence of weakness?  A good place to start is the Leading Economic Indicators Report, and the factory output is a key element. For two quarters in a row the factory sector has been shrinking. Every time that has happened in history a recession has followed. There has been only one exception. The timing is difficult to determine but generally within a year. If that is so this time, then a recession should appear early next year or sooner.

Of course the one exception can happen again.

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