Wednesday, November 30, 2022
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CFNAI’s assumed recession for 2022H1


Opinions about the U.S. recession earlier this year (e.g., the observer less than a month ago), CFNA Have the following needs:

The three-month moving average of the CFNAI fell below zero (ie, below trend growth) in May and June.This CFNAI Notes states that “after a period of economic expansion, an increase in the probability of a recession has historically been associated with CFNAI-MA3 values ​​below –0.70.” CFNAI-MA3 does not cross this threshold.

As for the indications from the number of indicators falling or rising (i.e. the diffusion index), we have the following graph.

From the notes:

The CFNAI Diffusion Index represents the sum of the absolute values ​​of the weights of the underlying indicators that contribute positively to the CFNAI in a given month minus the three-month moving average of the sum of the absolute values ​​of the weights of those indicators that contribute positively to the CFNAI Contribution for the given month be negative or neutral. Historically, CFNAI Diffusion Index values ​​have been higher than –0.35 during periods of economic expansion.

Therefore, I (still) don’t see a recession in the first half of 2022.



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