from wall street journal:
“This is a ‘Gordo’ recession,” said Ray Faris, chief economist at Credit Suisse. Mr. Faris found himself one of the few economists last fall who predicted the economy would narrowly avoid recession this year. Every six months, economists predict a recession six months from now, he said. “By the middle of the year, people will still be expecting a recession six months from now.”
This article refers to a set of indicators (you can see the monthly postal), but here are the latest weekly indicators as of 2/25 – Lewis-Mertens-Stock Weekly Economic Index, Baumeister-Leiva Leon-Sims WECI and OECD Weekly Tracker.
figure 1: Lewis-Mertens-Stock weekly economic index (blue), OECD weekly tracker (tan) and Baumeister-Leiva-Leon-Sims US weekly economic conditions index plus 2% trend (green).Source: New York Fed via fred, OECD, WECI.
The weekly tracking index, which fell into negative territory in the week ended November 26, is now at 3%, ahead of WEI (1.1%) and WECI+2% (1.8%). A WEI reading of 1.1% for the week ending 2/25 could be interpreted as a 1.1% YoY increase if the 1.1% reading persisted throughout the quarter. Baumeister et al. A reading of -0.2% is interpreted as a growth rate of -0.2% above the long-term trend growth rate. US GDP growth averaged around 2% over the period 2000-19, so this implies an annual growth rate of 1.8% as of 11 February 2011. The reading of 3.0% in the OECD’s weekly tracking index can be interpreted as a year-on-year growth rate of 3.0% as of February 25.
The OECD Weekly Tracker continues to rise even as the other two series slowly decline. It is important to remember that WEI relies on correlations of ten series available at weekly frequencies (e.g., unemployment claims, fuel sales, retail sales), while WECI relies on mixed-frequency dynamic factor models. The Weekly Tracker — at 3.0 percent — is a “big data” approach that uses Google Trends and machine learning to track GDP. As such, it does not itself depend on actual economic indicators.
Returning to recession forecasts, Prakken and Herzon of S&P Global Market Intelligence (nee IHS Markit) write in today’s US Forecast Letter:
− S&P Global Market Intelligence raised its 2023 real GDP growth forecast to 1.0% YoY from 0.7%. 1 The revision mostly reflects an upward revision to our first quarter growth forecast from -1.3% driven by unexpectedly strong consumer spending in January, which was only partially offset by downward revisions to net exports and inventory investment.
We expect the economy to contract only 0.1% in the second quarter, at which point a countercyclical rebound in auto production would add about 0.6 percentage points to GDP growth. While the base case forecast does show two consecutive quarters of decline in GDP, the event is best described as a pause in economic activity rather than an outright recession, as output fell just 0.1% in both quarters. Positive growth resumed in the second half of the year but below trend growth.
