As if a horrible housing market isn't enough of a drag on the economy, businesses are now curtailing their spending as well. In December, a survey of manufacturers indicated that their budgets are being cut, and this week we learned that service sector businesses are also contracting. The bad news: recession. The good news: additional Fed rate cuts.
The chart below shows the decline in the manufacturing and services sectors indices. An index reading above 50 indicates that the sector is generally expanding.