When David Stockman spoke at our IES conference in October, he had a whole slew of charts that showed that the main street economy had nothing to do with the Wall Street one – and that there were more signs of weakening growth than strengthening.

He recently showed some updates and these were the two that most caught my eye. Both of these are from the more cyclical sectors that most often cause recessions.

Look at the year-over-year change in Industrial Production.

Industrial Production Decline 

This indicator just crossed zero again and would suggest a recession sometime next year. More interesting to me is the overall pattern. The first peak came in late 1997. It was followed by a modest fall into 1998 and then a tepid bounce into early 2000. Then came a more substantial decline into the mild recession of 2001 to -6%. And then a bigger, longer bounce back to positive, followed by the dramatic decline to -16% into the great recession into the latter part of 2009.

The final bottom came almost 12 years after the peak.

The next peak came very sharply with the dramatic first QE steroid shot into mid-2010 That was followed by a mild drop and more sideways bounce into 2014. Then there was a larger drop to -5% into early 2016 – a near recession, now that QE was countering any such thing. Then a bounce back positive again and now a potentially final drop that has already crossed zero.

I fully expect this decline to go much lower than the last one at -16% to 20-25%+. A 12-year lag on the 2010 peak would put this bottom into 2022. I expect late 2022+.

Construction Spending 

The next indicator has more of a megaphone pattern with slightly higher highs and progressively lower lows – mimicking the pattern I have been seeing in the stock markets, longer and shorter term.

There was a modest dip in construction that didn’t go negative from 1994 into 1995. After a rebound into late 1999, the next dip came into mid-2002 and went to -1% in that mild recession. And then there was another slight new high into late 1995 (when I called for a housing bubble top) and then the dramatic plunge down to -18% from late 1995 into 2009.

Since, we have seen another slightly higher growth peak in 2018 and a decline that has thus far fallen to -3%. A lower low this time would suggest a plunge to -25%+!!!

So, the big question is: When do the ever-optimistic “markets on crack” get the picture?

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Harry Dent
Harry S. Dent Jr. studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of his chosen profession that he turned his back on it. Instead, he threw himself into the burgeoning new science of finance where identifying and studying demographic, technological, consumer and many, many other trends empowered him to forecast economic changes. Since then, he’s spoken to executives, financial advisors and investors around the world. He’s appeared on “Good Morning America,” PBS, CNBC and CNN/Fox News. He’s been featured in Barron’s, Investor’s Business Daily, Entrepreneur, Fortune, Success, U.S. News and World Report, Business Week, The Wall Street Journal, American Demographics and Omni. He is a regular guest on Fox Business’s “America’s Nightly Scorecard.” In his latest book, Zero Hour: Turn the Greatest Political and Financial Upheaval in Modern History to Your Advantage, Harry Dent reveals why the greatest social, economic, and political upheaval since the American Revolution is on our doorstep. Discover how its combined effects could cause stocks to crash as much as 80% beginning just weeks from now…crippling your wealth now and for the rest of your life. Harry arms you with the tools you need to financially prepare and survive as the world we know is turned upside down! Today, he uses the research he developed from years of hands-on business experience to offer readers a positive, easy-to-understand view of the economic future by heading up Dent Research, in his flagship newsletter, Boom & Bust.