“Feckless Leadership… Is Killing Us” – ‘Soft Data’ Survey Data Continues To Disappoint

March 1, 2023

After Philly’s Fed business outlook survey collapsed, the string of regional ‘soft data’ has continued to weaken.

Chicago’s PMI disappointed, printing 43.6 (weakest since Nov), down from 44.3, and below expectations of a rebound to 45.5 with employment falling at a faster rate, new orders contracting, production’s slowdown accelerating, and prices still rising.

This is the 6th straight month of contraction (sub-50) for the Chicago PMI.

The Richmond Fed Manufacturing survey notably missed expectations, tumbling from -11 to -16 (vs expectations of a rebound to -5) with shipments tumbling, new orders deep in contraction, number of employees and wages weakened, and capacity utilization weakening.

Additionally prices paid were flat while prices received slowed, signaling margin pressures and/or an inability pass on costs to consumers. We do note that Richmond Fed Services did pick up in Feb but remains in contraction for the 12th straight month.

Finally, The Dallas Fed Services Sector outlook improved modestly but remains in contraction for a 10th straight month.

Perceptions of broader business conditions continued to worsen in January, though pessimism waned. The general business activity index posted an eighth consecutive negative reading but moved up six points to -15.0. The company outlook index also improved from -11.0 to -8.3, while the outlook uncertainty index remained elevated at 20.0, above its series average of 13.4.

Price and wage pressures remained elevated, though there was some moderation in input price growth.

Respondents had some interesting things to say…

“The constant speculation of a recession is becoming a psychologically self-fulfilling prophecy.”
“The labor market is still very tight.”
“With the rising interest rates, cost of goods and inflation, our business has experienced a fall in revenue.”
“Interest rates and inflation are killing us.”
“The feckless leadership from the White House, the damaging energy policies and the electrical vehicle push are causing unneeded chaos in all parts of the economy. What will happen to the automobile manufacturers that have totally remade themselves if electrical vehicles are proven not to be the answer? And what about all the battery-making facilities that won’t be needed?”
“[We are] not really seeing any business activity pickup.”
“All our costs have increased significantly. Yet, selling prices have dropped significantly.”
“Retail activity is slowing at an accelerated pace.”