U.S. Economy Showing Some Signs Of Cracking

The resiliency of the U.S. economy is now being questioned after Tuesday's economic data report indicates cracks are starting to appear.

According to Bloomberg, Tuesday's "abrupt" drop in the Institute for Supply Management's services gauge to a multi-year low represents yet another weak data set for the month of August.

Coupled with the ISM factory survey that suggests a contraction in manufacturing, a weaker-than-expected jobs report, car sales falling short of expectations and consumer sentiment sitting at a four-month low, investors have reason to be concerned.

Bloomberg did, however, suggest the weak economic data aren't "evidence that growth is falling off a cliff," rather, the data indicate it is more difficult to support the thesis that the U.S. economy remains resilient and its momentum can continue.

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The question everyone is now asking is if the Federal Reserve will proceed with a rate hike in September.

"The latest set of ISM numbers is shockingly weak," Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez told Bloomberg. "It certainly gives the doves at the Fed more ammunition. It makes the Fed's conversation at the September meeting that much more contentious."

Shapiro also suggested that the likelihood of a rate hike is "a very close call" and "almost a toss-up" following the recent economic data reports.

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