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The ISM does not indicate the start of a recession.

The ISM Service PMI for December was released on Friday, and it came in below expectations. This triggered fears that the economy could be headed toward a hard landing. Analysts at Wells Fargo have forecast an upcoming recession; however, they also noted that this report does not necessarily mark its start.

To understand what this means for the overall economy, we must first look at what exactly is included in the ISM Service PMI index. The index measures activity within non-manufacturing industries such as healthcare and hospitality services by surveying purchasing managers from those sectors about their current business conditions and outlooks. It provides insight into how these industries are performing relative to one another over time, which can help us gauge whether or not economic growth is slowing down or accelerating quickly enough to trigger a recessionary period of contractionary economic activity across all sectors of industry (including manufacturing ones as well), eventually leading up to an eventual recovery period afterward if things don’t get too bad before then (which let’s hope doesn’t happen).
 
With December’s reading coming in at 49 – just barely under – it makes sense why analysts would be concerned about where things are going next given how close we were already running along pre-existing lines of demarcation between growth and contraction here (as opposed to, say, something much further away like 40). Even though Wells Fargo believes that this report alone isn’t indicative of a looming recession yet (and thus far there haven’t been any other major indicators pointing towards one either), investors should still take caution when dealing with stocks right now until more information becomes available regarding our future trajectory over time—because even small changes can make huge differences depending upon context!