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Recession Watch: PCE growth

TVC:US10Y   US Government Bonds 10 YR Yield
Here is a chart of quarterly PCE growth, which gives another useful 'recession watch' indicator. It is currently at a critical level and worth keeping a close eye on.

Commentary from "The Recession Playbook" from Morgan Stanley:

"With growth in real personal consumption expenditures ( PCE ) below 2.5% sending a reasonably consistent recession signal. Each of the last 5 recessions has seen real PCE actually shrink on a y/y basis by the end of the recession, but leading into the recessions a large decline in the growth of PCE is also very consistent. Given the heavy reliance of the US economy on the domestic consumer, slowing consumer spend is perhaps an obvious precondition for any recession."


The chart data is from the Federal Reserve Economic Data site ( FRED ).
https://fred.stlouisfed.org/series/DPCER...

It can be studied in Tradingview using the ticker:
'QUANDL:FRED/DPCERO1Q156NBEA'
"History shows that even with positive GDP growth, default rates on US corporate debt can and will start rising prior to a recession. ... When both macro and micro market forces point to an unmistakably negative outlook, I expect the next stressed credit cycle to produce default amounts that will be higher than any in the past due to the enormous bond, bank, and non-bank debt build-up, and the crisis may last longer than the previous one. Why? Because central banks will have fewer tools to bring to bear and the fiscal stimulus, if any comes, will take longer to assist in the eventual recovery. ... I do not expect the next crisis to be as severe or as global as the last. But if real estate and personal mortgage losses also escalate dramatically and China’s economy sharply contracts, it may very well be.
From: https://blogs.cfainstitute.org/investor/2019/08/05/edward-altman-where-are-we-in-the-credit-cycle/
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Economists expect the new tariffs, which largely affects consumer goods, to boost inflation ... Goldman Sachs estimates that tariffs have boosted year-on-year core PCE inflation by 10-15 basis points so far and that the new duties will add another 20 basis points. If core inflation remains > 2.0%, the Fed lacks reason for a bold rate cut. So this begs the next question, why does T want to boost inflation with tariffs if it discourages rate cuts by the Fed?

Last month the Fed hinted to a"one and done" 25-basis-point cut in July. But the market implied probability of a 50 bps rate cut by Fed at the September 18 meeting has risen to 30 per cent.
The 30 year yield is signaling economic fears and US yields remain far above the global average.
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It looks more like a double bottom on your chart
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