from Goldman Sachs (A. Nathan, J. Grimberg) today:
although last week Q2 GDP data showed growth contracting for the second straight quarter – breaking the rule of thumb that two quarters of negative growth constitute a recession –we don’t think America is officially in recession. We note that the NBER’s most important indicator of identifying monthly and quarterly business cycle peaks continues to increase as gross domestic income growth and nonfarm payrolls continue to grow rapidly in the first quarter. Although labor market data has historically lagged other economic indicators, it is historically unusual for us to find that the labor market was as strong as it is now, even at the beginning of a recession. we see Q2 Corporate Financial Results and Management Guidance Provided further evidence that the economy continued to expand in the second quarter, and also thought information from credit market fundamentals was reassuring.That said, growth has slowed considerably, so we continue to look forward to From here, the Fed slowed the pace of tightening, raising rates by 50bps in September and 25bps in November and December.
To recap, here are the key metrics followed by the NBER Business Cycle Dating Committee, as well as IHS Markit Monthly GDP in Figure 1 (former macroeconomic advisor, series followed in previous BCDC documents), GDP and GDO in Figure 2, and The weekly frequency indicators in Figure 2 are shown in Figures 3 and 4.
figure 1: Nonfarm payrolls (dark blue), Bloomberg consensus as of Aug. 1 (blue+), civilian employment (orange), industrial production (red), 2012 excluding transferred personal income (green), manufacturing and trade sales in 2012 dollars (black), consumption in 2012 dollars (light blue), monthly GDP in 2012 dollars (pink), official GDP (blue bars), all log normalized to 2021M11=0 . Sources: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (published August 1, 2022), NBER, and author’s calculations.
figure 2: GDP (blue), GDO (red), and GDO (red square) assuming constant 2022Q2 actual GDI, all in billions. Ch.2012$ SAAR, logarithmic scale. The NBER uses shades of grey to define the peak and trough dates of the recession. Source: BEA, NBER and author’s calculations.
image 3: Lewis, Mertens and Stock weekly economic indices as of July 23. Source: FRED
Figure 4: Baumeister et al.Weekly State Economic Conditions Indicators Until June 25th.
How to do Thesis for a U.S. recession in the January-April time frame? I’m still (highly) skeptical.
