The cycle has turned

The economy’s outlook was further dimmed by other data on Thursday showing an unexpected increase in the number of Americans filing claims for unemployment benefits last week. That pushed the four-week moving average of claims to a one-year high, an indication that job growth was moderating.

There was also little sign of inflation in the economy, with producer prices dropping in January for a second straight month. Moderate inflation and softening domestic demand support the Federal Reserve’s pledge to be “patient” before raising interest rates further this year.

Note the change in Fed from tightening to easing. Note the demand collapse. Recession odds be climbing. The goal is to keep a mild recession, then a quick restructure then move on to our ten years of slight deflation.  That is what the Euler path says, but we likely be doing a requant of much more serious proportions.

Cities and counties be hit as they rely on sales tax and consumer is delevering. That in turn rushes the tax scramble out here to front and center. Federal tax income be declining as business taxes drop. Fed be QEing. This also means that we will not be seeing a ten year yield higher than 3%, likely 2.8% is the new limit so out target horizon has gotten narrow, the can kick faltering.

NEW YORK (Reuters) - J.P. Morgan on Thursday reduced its tracking estimate on U.S. economic growth in the fourth quarter of 2018 following data that showed domestic retail sales took a 1.2 percent “nosedive” in December, which was its steepest monthly drop in nine years.

U.S. gross domestic product likely grew at a 2.0 percent annualized pace in the final three months of last year based on the latest retail sales figures, slower than an earlier calculated rate of 2.6 percent, J.P. Morgan economist Michael Feroli wrote in a research note.

Confirms our potential growth is slightly less than 2%. We have two upticks in a row on unemployment, and that is the key barometer for blue bar.