Charles Payne has recently joined the ranks of those predicting an upcoming recession. Despite this gloomy outlook, current indicators do not strongly support the idea of an economic downturn looming on the horizon. Let’s delve into the various factors at play that paint a different picture than what some might expect.
- Figures to Consider:
- Nonfarm Payroll (NFP) employment from CES
- Implied NFP from preliminary benchmark
- Civilian employment
- Industrial production
- Personal income excluding current transfers
- Manufacturing and trade sales
- Consumption
- Monthly GDP
- GDP
These indicators, when examined closely, do not align with the narrative of an impending recession. The data reveals a more nuanced and complex economic landscape than a straightforward recession forecast might suggest.
- Alternative Viewpoints:
While the main indicators may not be indicative of an imminent recession, alternative metrics also paint a similar story. For instance, the Sahm rule (real time) indicator has fallen below the trigger rate, suggesting a different perspective on the state of the economy.
- Forecasting Models:
Even with variations in forecasting equations and models, the consensus leans towards a different outcome than a recession in the near future. While some models, like the Chin-Ferrara variation, show no immediate signs of a downturn, a simple term spread model does raise some cautionary flags.
- Estimated 12 month ahead probabilities of recession from probit regression on term spread and short rate
- NBER defined peak-to-trough recession dates shaded in gray
These forecasting models provide a more nuanced understanding of the economic outlook, offering insights that go beyond the surface-level predictions of a recession.
In conclusion, while the idea of a recession is looming in the background, the current indicators, alternative viewpoints, and forecasting models present a more complex narrative. It is essential to consider the multifaceted nature of the economy and avoid jumping to hasty conclusions based on overarching predictions. By analyzing the data comprehensively and understanding the nuances of each indicator, we can navigate the economic landscape with a more informed perspective.
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