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Recession Watch: I agree with ZeroHedge


from Zero Hedge

Given the long lag between recession indicators and economic downturns, it's not surprising that economists have given up on recession expectations. However, while a recession hasn't happened yet, that doesn't mean it still won't happen. We should pay special attention to historical data related to economic growth.

To recap, here are the indicators the NBER uses to determine peaks and troughs, although not “in real time.”

figure 1: CES Nonfarm Employment (NFP) employment (blue bold), civilian employment (orange), industrial production (red), personal income excluding current transfers in 2017$ (green bold), manufacturing and trade 2017 Sales $ (black), 2017 consumption (light blue), 2017 monthly GDP (pink), third release GDP (blue bar), all logarithms normalized to 2021 M11=0. Source: BLS via FRED, Federal Reserve, BEA 2024Q1 Advance Release, S&P Global Market Insights (Nigerian macroeconomic consultant, IHS Markit) (5/1/Published in 2024) and the author's calculations.

Everyone has their favorite metric—vehicle miles driven, gas consumption, full-time employee growth, etc. I only observe that, using data released as of May 18, the Lewis-Mertens-Stock Weekly Economic Index shows 2.05% (which is only on trend if the trend is 2%).

this Baumeister, Leiva-Leon, Sims weekly economic conditions indicators is -0.52% (i.e. about half a percentage point below trend growth).

So a recession is still possible, maybe six months from now, maybe next month. A simple ordinary term spread model suggests that the probability of a recession is highest in May, so it is still possible. or not.



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