Close to the tipping point of a recession?

Business spending is expected future demand. Businesses don't think the demand is going to be there to sell their products. Because of this, businesses remain fearful of ramping up their spending however much cash they have on the balance sheet; however profitable they are in the near term. What we can see, in the last six months or so, is surprisingly week business spending, which is a real concern at the federal reserve. The Fed is worried that businesses have a bit more pessimistic perception of what is around the corner.

The last Q1 GDP numbers that were released on Friday April 27, really showed an economy somewhere between a soft landing and a recession; good growth at 1.3% annualized. Growth is only moderate at this point. Where we go in the next ISM report will be important.

Gasoline prices are now back up to around $3 a gallon which is going to take a big bite out of the consumers discretionary spending.