uploads///YoY Nominal GDP recession

US Nominal GDP Seems to Be Signaling a Recession

By

Nov. 22 2019, Updated 6:38 a.m. ET

What does the nominal GDP trend suggest?

During his latest webcast, “Turning Points,” Jeffrey Gundlach presented a chart that seems to be signaling a recession in the making. As the chart below shows, nominal GDP is down to levels matching those that have marked the beginning of earlier recessions in the US (SPY) (IVV) (VOO). Nominal GDP is currently at levels that were seen seven to eight years ago.

Article continues below advertisement

Marking the beginning of a recession?

The nominal GDP figure is at a level that seems to be marking the beginning of a recession, according to Gundlach. He did admit that nominal GDP is low because inflation is so low. However, the year-over-year US nominal GDP chart shows that the level is exactly where it’s been at the start of previous recessions in the US.

The US real GDP rate hasn’t provided any respite either. Since the financial crisis, we’ve seen real GDP levels to be stable or falling. Real GDP forecasts are also at an all-time low. For 2016, analysts estimate the US real GDP to grow by a meager 1.5%. The 2017 estimates are better at around 2.2%.

US economic recovery is lagging

In his investment outlook for September 2016, Bill Gross of Janus Capital (JNS) also talked about US economic recovery lagging. According to Gross, the ongoing recovery from the financial crisis of 2009 now lags behind any of the prior recoveries seen in the US (IWD).

Let’s now move on to Jeffrey Gundlach’s view on the rate hike.

Advertisement

More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo
    Do Not Sell My Personal Information

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.