With nominal consumption above consensus in August (+0.4% vs. +0.2% m/m Bloomberg), and consumption and personal income continuing to rise, we have below a picture of some of the key metrics followed by the NBER Business Cycle Dating Committee.
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figure 1: Nonfarm payrolls (dark blue), Bloomberg consensus on NFP as of September 30 (blue+), civilian employment (orange), industrial production (red), personal income excluding 2012 2012 dollar transfers (green ), manufacturing and trade sales in 2012 dollars (black), consumption in 2012 dollars (light blue), monthly GDP in 2012 dollars (pink), official GDP (blue bars), all logarithms normalized One is 2021M11=0. The lilac shading indicates dates associated with the H1 hypothetical recession. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (published September 1, 2022), and author’s calculations.
Manufacturing and trade sales also rebounded in July, although the shift away from commodities was still evident (though they were still 3.7% above NBER peak levels).
There appear to be differences in GDP and other metrics; however, if we look at GDO, they appear to be more consistent.
figure 2: Nonfarm payrolls adjusted to preliminary annual benchmark revisions (dark blue), civilian employment (orange), industrial production (red), 2012 dollars excluding transferred personal income (green), manufacturing and trade in 2012 dollars Sales (black), consumption in 2012 dollars (light blue) and monthly GDP in 2012 dollars (pink), GDP, GDO (blue bars), all log normalized to 2021M11=0. The lilac shading indicates dates associated with the H1 hypothetical recession. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (published September 1, 2022), and author’s calculations.
For more discussion on GDP vs GDO and other related indicators, see here postal From the beginning of the month, discuss the annual revision of GDP, here.
With consumption, employment and production indicators rising and GDO trending sideways in the first half, it seems unlikely that the first half will be declared a recession, a broad-based and sustained decline in economic activity.
