I was curious to take a look at how Mike Dueker’s Business Cycle Index and other measures assess the current situation.
From Russell Investments:
Current forecasts show a considerably deeper setback than last month. The stumble in the economy is real and reflects expected lackluster demand for exports, capital expenditures and consumer durables.
The most likely path for the BCI calls for improvement in the cyclical state of the economy this autumn rather than a double-dip recession.
Bill McBride, with whose assessments I’ve found it’s wise not to disagree, has this take:
I agree with Krugman that a further slowdown– following the below trend first half of 2010– will definitely feel like a recession– and it will probably lead to an unemployment rate “double dip”…. The 2nd half slowdown is here. I still think we will avoid a technical double-dip recession, but it will probably feel like one.
Federal Reserve Chair Ben Bernanke last week reported that the Federal Reserve has an outlook that has also darkened slightly in the last few months but nevertheless remains brighter than some private analysts:
In conjunction with the June FOMC meeting, Board members and Reserve Bank presidents prepared forecasts of economic growth, unemployment, and inflation for the years 2010 through 2012 and over the longer run. The forecasts are qualitatively similar to those we released in February and May, although progress in reducing unemployment is now expected to be somewhat slower than we previously projected, and near-term inflation now looks likely to be a little lower. Most FOMC participants expect real GDP growth of 3 to 3-1/2 percent in 2010, and roughly 3-1/2 to 4-1/2 percent in 2011 and 2012. The unemployment rate is expected to decline to between 7 and 7-1/2 percent by the end of 2012. Most participants viewed uncertainty about the outlook for growth and unemployment as greater than normal, and the majority saw the risks to growth as weighted to the downside.
Elsewhere, the Aruoba-Diebold-Scotti Business Conditions Index, which was thrown into a deep funk by the
lost temporary Census jobs (orange plot in the figure below), cheered up some at the modest increase in industrial production reported July 15 (magenta), and slid back down with the continued stagnation in the new unemployment claims numbers released July 22 (red).
Or, if you prefer a steadier bottom line that is less prone to bobbing about with each new data release, you can always turn to the Econbrowser Emoticon, which has been stuck in neutral (signaling sluggish growth) since August 2009. Which, by the way, remains my call today.