Stocks are sharply lower today as another key piece of economic data shows significant weakness. The latest reading of the ISM Manufacturing is not looking good. It showed a drop to 47.8% from a reading last month of 49.1%. This reading marks the lowest level since June 2009, when the Great Recession ended. Consensus estimates were looking for a reading of 50.2%.
The decline in activity is significant. Readings above 50 show expansion while readings below 50 show contraction. Only three of 18 sectors tracked by the survey reported growth, down from nine the month before.
The catalyst for the sharp decline in manufacturing could be a few issues.
President Trump quickly took to Twitter to voice his concern and blamed the Fed for keeping interest rates too high. Others have suggested that the ongoing trade war is to blame for the fall off, and a general sense of confusion about trade policy.
Whatever the case may be, the lower reading is a major cause for concern. It has been suggested that a reading of 46 or lower signals recession, and the last reading is getting alarmingly close to that level. Manufacturing is not the only area of the global economy showing weakness, either, and the slowdown appears to be spreading.
Although manufacturing is a smaller part of the overall economy than it used to be, it is still a key component.
There are some indications that the slowdown in manufacturing is spreading to the larger services industry as well, and if so, that could significantly exacerbate the current slowdown.
Numerous issues could also make the problem worse, including an escalation of the trade war or increasing tensions with Iran.
The global economy is showing serious symptoms of a major slowdown, and that slowdown could turn into the next major recession. Even with aggressive central bank easing, the damage could already be done, and the next recession may be a foregone conclusion. That makes now the ideal time to start diversifying away from stocks and into asset classes that may potentially outperform as economic conditions tighten further.
Against the current economic and geopolitical backdrop, there may be no better asset class to turn to than gold.
Gold not only comes with significant and unlimited upside price potential, but it may also provide a hedge against a weaker dollar, higher inflation and geopolitical risks. Adding this key asset class to your portfolio has never been easier, and perhaps never more important.
Speak with an Advantage Gold account executive today about the potential benefits of gold ownership. Our associates are here to answer any questions you may have and can even show you how to build a significant allocation using an IRA account.
Don’t wait for the next major recession to grip the global economy or for stocks to collapse again before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: economy weakness, ISM, low reading, manufacturing, trade war