Is the Recession Already Here? Shocking News Revealed!

A Wave of Recession: Analyzing Key Indicators

As the economic tides ebb and flow, a rising number of signals hint at the looming presence of a recession in the broader economy. Let’s delve into these key indicators meticulously followed by the NBER Business Cycle Dating Committee, shedding light on the current state of affairs.

1. Nonfarm Payroll (NFP) Employment:

• NFP implied preliminary benchmark revision
• Civilian employment as officially reported
• Industrial production

While scrutinizing these indicators, only civilian employment from the household survey and industrial production emerge as potential bearers of a recessionary message. Despite this, it’s vital to acknowledge that industrial production accounts for a mere 15% of GDP. Moreover, the civilian employment data derived from the Current Population Survey (CPS) harbors inherent flaws. By utilizing smoothed population controls, a more sanguine outlook on labor market conditions transpires, enhancing our understanding of the employment landscape.

1. Alternative Indicators:

• Pop control smoothed civilian employment
• Civilian employment adjusted to NFP concept

In a bid for comparative analysis, alternative indicators are juxtaposed with the smoothed civilian employment and NFP-adjusted employment figures. Charting these indicators aims to provide a holistic view that transcends conventional metrics, fostering a deeper comprehension of the economic landscape.

1. Nonfarm Payroll Early Benchmark (NFP):

• Manufacturing production
• Retail sales
• Vehicle miles traveled
• Coincident index

Navigating through the murky waters of economic projections, it’s crucial to remember that these series are subject to revisions, with GDP figures often undergoing significant alterations. The NBER Business Cycle Dating Committee exercises caution by steering clear of over-reliance on GDP data, exemplified by the 2001 recession that momentarily diverged from the conventional two consecutive quarter rule-of-thumb.

As the recession narrative gains traction, the real-time Sahm rule emerges as a telling sign of economic distress. Notably, the indicator is propped up by a surge in the labor force, rather than a decline in employment, underscoring the nuanced nature of economic forecasting. Recalibrating the Sahm rule using refined data sets from the Bureau of Labor Statistics paints a nuanced picture, with the indicator hovering at the threshold of 0.5 points as of August 2024.

In conclusion, the economic landscape is replete with indicators and signals that provide glimpses into the future trajectory of the economy. As we navigate the complexities of economic analysis, staying vigilant and attuned to these key indicators is paramount in preparing for the potential storm ahead. Stay informed, stay prepared, and brace yourself for what lies on the horizon.