NFP employment in October was 150,000 (below consensus 180,000) and private NFP employment was 99,000 (consensus 158,000). Here is a graph of the business cycle indicators followed by NBER’s BCDC and S&PGMI’s (formerly Macroeconomic Advisors) monthly GDP:
figure 1: Nonfarm employment employment includes preliminary baseline (dark blue), civilian employment (orange), industrial production (red), 2017 personal income excluding transfers (green), 2017 manufacturing and trade sales$ (black), Consumption of monthly GDP (pink) and GDP (blue bars) in Ch.2017$ (light blue), 2017, Ch.2017$ in 2017, all logarithms normalized to 2021M11=0. Source: BLS via FRED, U.S. Bureau of Labor Statistics preliminary benchmarksFederal Reserve, BEA 2023Q2 released for the third time, fully revised, S&P Global/IHS Markit (Nigerian macroeconomic consultant, IHS Markit) (10/2/2023 release), Federal Reserve Bank of Atlanta (released November 1, 2023), and author’s calculations.
Some argue that the Civilian Employment (CPS) series peaked before the CES Nonfarm Employment Employment series. This has happened twice in the past four recessions (using data available at the time) [1]. Thus, a decline in civilian employment may be viewed as an indicator of recession, even though it is a poor predictor of economic activity.
Note that while civilian employment as measured by the CPS declined slightly, the employment series adjusted for the NFP concept rose in October. Here are the alternative series:
figure 2: NFP employment incorporates the author’s calculated preliminary benchmark (bold blue), the Philadelphia Fed’s early benchmark (red), household employment adjusted to conform to NFP concepts (tan), and the author’s adjusted QCEW coverage based on Census X-13 Employment (green), all in thousands, seasonally adjusted. Source: BLS via FRED, Philadelphia FedBureau of Labor Statistics, BLS-QCEWand the author’s calculations.
That said, two indicators that the National Bureau of Economic Research does not follow are instructive. The first is the real-time Sahm indicator.
source: fredviewed on November 3, 2023.
October’s reading was 0.33, with 0.50 being the threshold for recession.
Rashad Ahmed asked me to focus on heavy truck sales.As I pointed out in this postheavy truck sales are a good concurrent indicator of a recession (certainly more important than VMT or gasoline supply).
image 3: Heavy truck sales, millions, SAAR (black). NBER-defined recession peak-to-trough dates appear gray. Source: Census from FRED, NBER.
Sales are down about 16% from the latest peak in May. Sales increased by 0% compared with the same period last year. Currently, the estimated chance of a recession in October is 8%. By comparison, in the 2007 recession, the year-over-year change at the start of the recession was about 30%.
So maybe there won’t be a recession in October (although all variables are subject to revision), but these two (consistent) indicators are moving in that direction.
