In light of today's employment release, key indicators followed by the NBER's Business Cycle Determination Committee are discussed here. However, several alternative indicators have been proposed (Some of dubious usefulness, such as vehicle mileage and gas consumption). Here is the chart for the corresponding time period, normalized to November 2022.
figure 1: Heavy truck sales (blue, left scale), coincidence index (pink, right scale), seasonally adjusted vehicle miles traveled using X13 (tan, right scale), seasonally adjusted gasoline supply using X13 (green, Right scale), seasonally adjusted oil consumption (sky blue), all in log form, 2022M11=0. Sources: Census, Federal Reserve Bank of Philadelphia, NHTSA (via FRED), Department of Energy EIA, and author's calculations.
While petroleum product supply and gasoline consumption are trending sideways, I believe these indicators are of limited usefulness in the current period. Vehicle miles traveled increased in 2023 and continued to increase through November. The coincident index, which is mainly based on labor market indicators, continued to rise, supporting the case that the economy will not decline in December. What's falling is heavy-duty truck sales, although it's not showing negative growth rates consistent with a recession.
In addition, we can also refer to GDO and Sahm's rules to further confirm that there is no recession. We don't have GDO for Q4 2023 (because we don't have GDI for that quarter). However, if we assume that net operating earnings in Q4 are the same as nominal net operating earnings in Q3, we can predict GDI and GDO.
figure 2: GDO, in billions 2017$ SAAR (blue bar, left scale) and Sahm Rule Index, real time, % (blue line, right scale). The value of GDO for the fourth quarter of 2023 is based on the assumption that project net operating income is constant at the level of the third quarter of 2023. The horizontal red dashed line is the recession threshold. Source: BEA, FRED, and author's calculations.
The Sam's Rule indicator suggests that we are not yet in a recession as of January 2024; furthermore, the indicator is moving leave from the threshold. Of course, it's possible for a retracement to occur and the economy to fall into recession, but this has only happened once in the past 50 years (reaching the threshold in October 1969 and falling and breaching the threshold in February 1970. NBER puts the peak at 1969 December) .