We are about a month away from the third quarter.This is a viewwrote a week ago:
…Based on the metrics I track, yes, I think we’re in a prolonged recession, and I’m expecting a hard reset in the second half of the year.
Below is the data for the week ended Aug. 6, as shown by the Merten-Stock-Watson weekly economic index.
resource: the Fed is gone Fredaccessed 11 August 2022.
From Fred:
WEI is an index of real economic activity using timely and relevant high-frequency data. It represents the common components of ten different daily and weekly series covering consumer behavior, labor market and production. WEI is proportional to fourth-quarter GDP growth; for example, if the WEI reads -2%, and the current WEI level persists for the entire quarter, one would expect GDP for that quarter to be, on average, 2% lower than a year ago.
The last reading was 3.17%. That means, per the text above, “if current WEI levels persist through the quarter, one would expect the quarter’s GDP to average 3.17% higher than a year ago.”
Some pointed to the increase in initial claims as evidence of a continuing recession.
figure 1: Unemployment Insurance Initial Claims, NSA (blue), seasonally adjusted (tan), all logarithmic.Source: U.S. Employment and Training Administration, via Fredaccessed 11 August 2022.
as described herein postal, the increase in jobless claims appears to be the product of a seasonal adjustment problem (a “shadow” of the 2020 recession) and false positives in several states. The initial claims did not appear to have increased that significantly.
resource: Ronnie Walker, “Explaining the Recent Rise in Initial Jobless Claims,” Goldman Sachs, August 10, 2022.
