Net Net: Promoting innovation and managing change
Net Net: Promoting innovation and managing change

Two more signs a recession could be coming

How to survive a recession: Economist

Stocks have gotten a lift lately in part from hopes that fears over a recession are overdone. That optimism could be a little premature.

In addition to several other trouble spots, two key indicators are flashing warning signs: income tax withholdings and corporate profits.

The withholdings data show taxes taken out of worker paychecks and are considered by some economists to be a strong indicator of overall economic growth. Released daily by the Treasury Department, the count is a simple nonadjusted measure of how much wages are growing.

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The latest numbers showed a 0.2 percent annualized decline over the past four weeks, compared to growth rates of 2 percent in December and 3 percent in January, according to market research firm TrimTabs.

The data show "the U.S. economy is already stalling out," TrimTabs CEO David Santschi said. He pointed out that the slowdown in withholdings comes as "credit markets are flashing clear warning signs about future growth, growth in building permits and housing starts has pulled back, and manufacturing activity continues to contract."