Dallas Fed finally admits oil prices lower due to economy in recession

As with most Federal Reserve Chairmen and Presidents, America’s central bankers rarely admit when the economy is in decline until well into a recession or downturn.  Yet with analysts trying their best to spin the data to say that the economy is simply in a slowdown due to deflation and lower oil prices, on Feb. 29 the Dallas Fed blew this propaganda completely out of the water and stated that oil prices were lower because the economy is in recession, rather than the opposite.

Nearly all commodities have been in a decline since the start of the summer of 2015, and the massive drop in global trade has validated this price deflation as being tied to a full fledged recession rather than simply a downturn in certain markets.  And because government data agencies manipulate key indicators so egregiously each week, month, and quarter, the true status of the economy is difficult to discern unless you compile the raw data, versus trusting in manipulated models.

  • We are in a recession. Oil prices are a symptom, not the cause.
  • Our overall forecast is level; however, we should be on an increased path for volume and pressuring our manufacturing capacity. Due to the low price of oil, there is a direct impact on the overall forecast of increased sales and manufacturing. Other segments of industries such as aerospace and general manufacturing seem static. The end result is we believe the economy overall is not positive.
  • Low commodity prices within the energy industry are brutal. Further rounds of headcount reductions are being planned now after multiple waves of reductions in 2015. Trying to plan cash flow in this environment is nearly impossible, as producers continue to cut activity and demand steeper and steeper discounts on products and services. Failure rate of companies in the energy industry will start to ramp up materially in 2016.
  • Customers are becoming more cautious about investing in expansion than they were this time a year ago.
  • There is continued weakness in oil- and gas-related equipment manufacturing. We anticipate improvement in the second half of the year, but no change in wages.
  • It’s a tough time in the oil patch. We plan on cutting 20 percent of staff this month after cutting 25 percent a year ago. We are not sure how we can sustain our skill sets with these dramatic troughs. – Zerohedge

dallas fed

Of course, data indicators from a single Federal Reserve region doesn’t signify that the nation as a whole is in recession, but when you add in manufacturing results out of the Philadelphia Fed, along with data from the Cleveland and St. Louis Fed’s, then it is undeniable that we are now in a full fledged recession.

cleveland fed

Philly Employment

st louis fed


It will be interesting to see what the central bank tries to do with the overall economy going into a Presidential election, but sadly it appears that the only market indicator Janet Yellen cares about these days are stocks and keeping the equity markets from crashing.

Kenneth Schortgen Jr is a writer for Secretsofthefed.comExaminer.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.