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Business Cycle Indicators, July 1

IHS-Markit’s monthly GDP is now down for seven months. Some of the key metrics that NBER BCDC follows:

figure 1: Nonfarm payrolls (dark blue), Bloomberg consensus on NFP (blue+), industrial production (red), 2012 personal income excluding transfers (green), 2012 manufacturing and trade sales (black) , Consumption is in Ch.2012$ (light blue) and monthly GDP in Ch.2012$ (pink) is normalized to 2020M02=0. NBER defines recession dates, peaks and valleys, shades of gray. Sources: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (published July 1, 2022), NBER, and author’s calculations.

We now have two out of five key metrics down in May. Monthly GDP fell for the seventh straight month. Figure 2 shows the monthly GDP path for different years,

figure 2: Official GDP (blue bars), IHS-Markit monthly GDP (lines), implied IHS-Markit June 2022 monthly GDP (red squares), all in billions of Ch.2012$ SAAR. Source: BEA Q1 3rd edition, various editions of IHS Markit.

Note the change in monthly GDP estimates.

In today’s weekly review, IHS-Markit noted:

We estimate that GDP in the first and second quarters fell at almost the same rate. The Bureau of Economic Analysis estimates that GDP fell 1.6% in the first quarter; we estimate a 1.5% decline in the second quarter based on the latest monthly data on international trade, consumer spending, inventories and other sources.GDP falls in two quarters popular Definition of recession.However, the first half of the year was not as weak as the GDP data (including our estimates for the second quarter) portrayed, and we believe it is unlikely that the official arbiter NBER Business Cycle Data Committee believes that the estimated decline in GDP for the first and second quarters is sufficient. Their Definition of recession This involves “a significant decline in economic activity that spreads across the economy and persists for more than a few months.”

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