A few weeks ago, we mentioned that Gluskin-Sheff economist David Rosenberg was worried about the sharp downturn in the year-over-year growth rate of the 3-month average of core CAPEX (capital expenditure) orders.
His interpretation: The fiscal cliff is already creating a lot of uncertainty, and could be pushing the US economy closer to recession.
Now everybody is talking about this fact and this chart.
In his latest note out, BTIG’s Dan Greenhaus updates Rosenberg’s chart with the latest data. It’s still not pretty (though it actually ticked up a tad with the latest reading.
But the aforementioned decline in capital goods orders speaks to the larger concern for investors; the fact that a potential economic slowdown does not begin after the fiscal cliff is triggered but rather, as we’ve been saying for months, before. And if this isn’t resolved, it might be too late before long.
In addition to Greenhaus, we see via Cullen Roche that Moody’s has put out roughly the same chart as a warning:
Everyone is watching this measure, and wants to know: Is this just pre-fiscal cliff jitters that will snap back next year, or is this the start of something bad?
Either way: You’ve been warned.
UPDATE: And another. Kit Juckes of SocGen has blasted it around, saying: “I hope you have all had a good look at a chart of core durable goods orders and GDP. The bear’s favourite picture, warning of recession.”
For more on this indicator, see Doug Short’s take.