Loading...
Chart Of The Day

ORDERS TO INVENTORIES AND THE 75% CHANCE OF A RECESSION

Interesting factoid here from David Rosenberg’s daily letter.  According to Rosey the economy has slipped into recession 75% of the time following orders-to-inventory data at current levels:

“What is critical here is the orders-to-inventories ratio, which leads the headline ISM by roughly three months and strongly suggests that we will be sub-50 and as such ‘double dip’ talk will re-emerge before the end of the year.  See what this ratio has done in recent months:

May: 1.44x
June: 1.28x
July: 1.07x
August: 1.03x
September: 0.98x

Ouch!  Detect a pattern here, folks?  The orders-to-inventory ratio is all the way back to January 2009 levels, when the economy was knee-deep in recession.  All we can tell you is what the historical record says — at this level in the past, the economy slipped into contraction 75% of the time.”

Source: Gluskin Sheff

Comments are closed.