All the recession warnings this week

On Jun 26, 2022

A tepid stock market, soaring inflation, and rising interest rates have left Americans less than optimistic about the state of the economy. Consumer sentiment has plunged to a record low, according to a University of Michigan survey released last week, fueled by frustration over high prices.

To be clear: we are not in a recession, at least not yet. But signs of an economic downturn are cropping up all over, in sectors from commodities to housing . Here’s what CNN Business reported last week:

Prices for the metal hit 16-month lows on Thursday after dropping more than 11% in two weeks — that’s bad news for investors who view copper prices as a bellwether for the global economy.

Copper is widely used in construction materials, and it faces increased demand in an expanding economy. That demand disappears when the economy contracts.

Prices shot up earlier this year when Russia, which accounts for 4% of global copper output, invaded Ukraine. Traders who were concerned about short supply began hoarding the metal. And now, copper prices are falling.

“Copper prices are just starting to account for the fact that global growth is slowing,” Daniel Ghali, director of commodity strategy at TD Securities, told CNN Business’ Julia Horowitz.

Purchasing Managers’ Index

The index released by S&P Global on Thursday found that US private sector output slowed “sharply” in June. Chris Williamson, chief business economist at S&P Global Market Intelligence, said producers of non-essential goods are seeing a drop in orders as consumers struggle with rising prices.

The Fed’s aggressive interest rate hikes are dampening the mood further.

“Business confidence is now at a level which would typically herald an economic downturn, adding to the risk of recession,” Williamson told CNN Business’ Julia Horowitz.

Consumer sentiment

A closely followed University of Michigan survey released Friday found that US consumer sentiment hit a new record low in June -— the lowest recorded level since the university started collecting the data 70 years ago.

The June index saw a 14.4% drop since May as consumers became increasingly alarmed about inflation. About 79% of those consumers said they expected bad times for business conditions in the upcoming year, the highest level for that metric since 2009.

The percentage of consumers who blamed inflation for eroding their living standards, 47% according to the June index, is only one percentage point lower than the all-time high reached during the Great Recession.

“As higher prices become harder to avoid, consumers may feel they have no choice but to adjust their spending patterns, whether through substitution of goods or foregoing purchases altogether,” Joanna Hsu, Surveys of Consumers director, said. “The speed and intensity at which these adjustments occur will be critical for the trajectory of the economy.”

Gas prices

The good news: Americans could find some relief is on the way for gas prices.

The bad news: It’s because traders are betting on a…