Is A Recession Brewing?

As the 1980 recession progressed, I started to take note of the visible indications in the local economy. In 1990 I was running my own business. Early in the year my local printer mentioned his business was falling off, and he said the owner of the sandwich shop across the street told him the same thing. I had a few people working for me and I was building up the business by expanding advertising, and I was making a decent profit each month. I didn't see any problem with my business.

But one thing I had been keeping an eye on since 1980 was the status of small office and retail buildings and office parks. I constantly took note of the number of ‘For Lease' signs and the square footage mentioned. While my business was doing okay in the first quarter of 1990, I had been noticing an increase in the amount of office and commercial space on ‘For Lease' signs. When my printer mentioned his experience, I began wondering what to expect.

Then in April our phones stopped ringing and orders awaiting us in the mail box each day dwindled off. It was bizarre, like someone threw a switch and just turned off our customers. My monthly profits quickly turned into increasingly larger losses. Months later, the 1990 recession was officially declared as having started around July.

Fast forward to July 18th, 2015. I dropped my daughter off and had an hour ride to get back home. On the ride back I once again took note of the ‘For Lease' signs, and the amount of square footage (old habits are hard to break). It hit me that there is suddenly a lot more commercial space listed on signs than I recall seeing in recent months. I also noticed several restaurants with unusually empty parking lots (this was Saturday night). Yes, this could just be vacation season, but it still seemed unusual.

On the way home, I stopped in a restaurant I frequent. My landscaper friend showed up at the bar. He has owned a landscaping business for 20 years and prior to 2008 had consistently good years. This year started off looking good. We had a tough winter and good spring rains here in the Northeast, which to landscapers means plenty of spring cleanups and more frequent cuttings. But something has changed in the past couple of months. Customers are telling him to only ‘skim coat' with mulch. He tells them it will wash away in the first rainstorm. They say they'll take the chance. They are buying electric hedge shears and trying to trim the hedges themselves, and not asking for bigger landscaping projects.

My friend says he is not making any money (he has 2-4 people working for him). They are living on his wife's income as a waitress in the restaurant we were sitting in.  But when I walked in, one of the waiters told me I was the first customer in 2 hours (again, this is on a Saturday night – they closed an hour early, which I think is the first time they've ever done that).

My landscaper friend, who knows many of the local small business owners, started going through a list of anecdotes he's heard from other businesses, and none of them were good.

I will be keeping an eye on the earnings reports coming out over the next several months and staying aware of what is going on my local community. I hope to spot an impending recession before the majority does, and adjust my trading and investment approaches appropriately.

Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day.  To find out more, please click on the following link: www.markettamer.com/seasonal

By Gregg Harris, MarketTamer Chief Technical Strategist

Copyright (C) 2015 Stock & Options Training LLC

Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.

Gregg Harris is the Chief Technical Strategist at MarketTamer.com.

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