The U.S. and European Economies are Heading for a Recession

The White House may be trying to change its definition of a recession to try to hide a bad economy. But if something walks like a duck, it's a duck. The Chicago Fed National Activity Index is a good indicator of where the U.S. economy is headed. It now points to a potential recession.

The Chicago Fed index is now in negative territory and also below zero after a correction from the previous month. On a quarterly basis, the index clearly shows where the economy is headed. For now, that appears to confirm the forecast of the Atlanta Fed's GDPNow model—1.6% growth in the second quarter. If so, it would be two consecutive quarters of negative growth, commonly known as a recession.

PMI fell below the dry line.

The S&P Global's report shows that in July, the initial value of the US composite PMI fell to 47.5, the lowest since May 2020; the initial value of the service PMI fell to 47.0; and the initial value of the manufacturing PMI fell to 52.3, the lowest since July 2020. The agency also pointed out that the initial value of the eurozone composite PMI fell to 49.4 from 52.0 in June, and the initial value of the manufacturing PMI fell to 49.6, the lowest in 25 months. The preliminary services PMI fell to 50.6, the lowest in 15 months.

South Africa's central bank announces a 75 basis point increase in its interest rate.

South Africa's central bank announced it would raise its main lending rate by 75 basis points to 5.50%, the largest rate hike in nearly 20 years. In addition, the country's June inflation hit a 13-year high, soaring from 6.5% in May to 7.4%, the highest level since May 2009.