Economy On Track To Post Largest Decline Since '82

Washington, DC, Dec. 9, 2008--Eight of the major 10 economic indicators that came out last week (Construction Spending, ISM Indices for Manufacturing and Nonmanufacturing activity, Vehicle and Chain Store Sales, Factory Orders, Employment and Delinquency Rates) worsened, signaling that the economy is on track in the fourth quarter to post the largest decline since the 6.2 percent drop in the first quarter of 1982, said Dave Huenther, chief economist for the National Association of Manufacturers  

The National Bureau of Economic Research announced last week that the expansion ended in December 2007 and that the economy has been in recession throughout 2008 despite positive GDP growth during the first two quarters of the year.

The explanation for this apparent disconnect is that the NBER relies on a number of monthly indicators (employment, industrial production, real wages and retail sales), and not quarterly GDP estimates, to time the business cycle.  Most of these indicators have been on the decline since the beginning of the year.

The severe declines in the ISM's indices of Manufacturing and Nonmanufacturing Business activity in November coupled with the dramatic 533,000 employment loss last month, show that both the depth and breadth of the recession are intensifying.

Lower consumer spending and business investment will likely be significant downside risks to the manufacturing sector in coming months, Heunther said.  Meanwhile, export growth appears to be deteriorating.  This week's reports on both international trade as well as the OECD's leading economic indicators should provide more information on the extent of the slowdown