Monthly GDP and Other Business Cycle Indicators

With the release of IHS-Markit monthly GDP, we have the following graph of key indicators noted by NBER BCDC.

Figure 1: Nonfarm payroll employment (dark blue), Bloomberg consensus for April NFP as of 5/2 (blue +), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), consumption in Ch.2012$ (light blue), and monthly GDP in Ch.2012$ (pink), all log normalized to 2020M02=0. NBER defined recession dates, peak-to-trough, shaded gray. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (5/2/2022 release), NBER, and author’s calculations.

The monthly GDP number is of interest since it provides some insight into the trajectory of overall output, that is down.

Figure 2: GDP as released by BEA (Q1 advance) (blue bar), and monthly GDP (black line), both in bn. Ch.2012$ SAAR. Source: BEA (Q1 advance) and IHS-Markit (May 2, 2022).

There are several tracking measures of GDP. IHS-Markit (formerly Macroeconomic Advisers) is perhaps one of the longest reported. The Chicago Fed also reports a monthly GDP growth rate (Brave-Butters-Kelley index). Here’re the two series compared for the same period.

Figure 3: Monthly GDP from IHS-Markit (black line), and from Chicago Fed (red line), m/m annualized, %. Source: IHS-Markit (May 2, 2022), and Chicago Fed via FRED.

A first reading on the trajectory of the economy in Q2 comes on Friday with the employment release (+400K per Bloomberg consensus).

35 thoughts on “Monthly GDP and Other Business Cycle Indicators”

  1. macroduck

    I know it’s just an incremental factor, but I’m interested to see what’s going on with mortgage equity withdrawal. In Q4 was about 3.5% of real disposable income:

    https://calculatedrisk.substack.com/p/the-home-atm-open-in-q4-2021-closing?s=r

    That was the fastest pace of MEW since before ye housing crash. The pattern for new loans resulting in equity withdrawal is a longer loan at a lower rate, with higher payments:

    https://www.jpmorganchase.com/institute/research/household-debt/report-tapping-home-equity

    Equity is available, but lower rates no longer are. If mortgage equity withdrawal were to go to zero, that would create a take about $160 billion per quarter out of available resources for household budgets, relative to Q4. We’ll see Q1 data on household wealth, including the mortgage data needed to calculate mortgage equity withdrawal, on June 9.

    So anyhow, there is another squeeze on household finances, on top of inflation. Good thing job growth is strong. Well, at least it seems to be. ADP Wednesday (median estimate +390,000) and BLS jobs data Friday (+400,000) will throw some light on that.

    1. pgl

      Bill McBride is always a must read. This is my comforting takeaway:

      Mortgage debt is up $1.05 trillion from the peak during the housing bubble, but, as a percent of GDP is at 48.9% – down from Q2 – and down from a peak of 73.3% of GDP during the housing bubble. This means most homeowners have large equity cushions in their home, and some MEW is not a concern.

    2. Bruce Hall

      Some data:

      – The $80 billion in equity tapped in Q4 2021 marked the largest quarterly volume in 15 years, as more than 1 million homeowners withdrew equity via cash-out refinance for the fifth consecutive quarter

      – Q4 2021 also saw the largest share of total available equity withdrawn since 2005, though homeowners are tapping their available equity at roughly half the rate than at the prior peak
      https://www.prnewswire.com/news-releases/black-knight-record-4-4-trillion-in-mortgage-originations-in-2021-year-sees-1-2-trillion-in-cash-out-refis-as-homeowners-tap-275-billion-in-equity-a-16-year-high-301496046.html

      Done in anticipation of inflation an higher interest rates?

    3. macroduck

      OK, I’m bored, so sorry for all the comments. But…

      There are problems ahead for residential construction. From Black Knight:

      “…the share of the median income required to make the principal and interest (P&I) payment on the average-priced home is now 32.5% (compared to) the all-time high 34.1% payment-to-income ratio seen in July 2006. A rise of just 50 more basis points in rates or a 5% rise in home prices would push affordability to its worst level on record… 95 of the 100 largest U.S. markets are now less affordable than their long-term (1995-2003) benchmarks, up from six markets at the start of the pandemic.”

      https://www.blackknightinc.com/black-knights-march-2022-mortgage-monitor/

    4. GREGORY BOTT

      Dude, that 3.5% is quarterly and not for the whole year. Generally, it is weaker the first half of the year and stronger in the second half. So no, it is not 3.5%. It’s more like 1.5%. Try harder.

      1. macroduck

        Dud, maybe if you aim at clarity instead of scoring points, you could tell us something we didn’t already know.

        McBride, n the other hand, writes with complete clarity. I’m pretty sure I understood his point perfectly well.

        Don’t bother trying again. You don’t have a prayer of improving on McBride.

  2. pgl

    https://www.cyclingnews.com/news/oleg-tinkov-fears-for-his-life-after-criticism-of-russian-invasion-of-ukraine/

    I never expected this kind of story at Cycling News:

    Oleg Tinkov fears for his life after criticism of Russian invasion of Ukraine
    Former team owner claims he lost billions in ‘fire sale’ of stake in Tinkoff bank

    Oleg Tinkov has hired bodyguards and claims he has been forced to sell his 35 per cent stake in the Tinkoff bank for a fraction of its true value after being targeted in Russia for his criticism of the invasion of Ukraine. The often controversial former WorldTour team owner walked away from professional cycling in 2016 and had focused on making Tinkoff one of the biggest online banks in Russia. Alberto Contador won the 2015 Giro d’Italia with Tinkoff-Saxo in 2015 but Tinkov became so frustrated by Team Sky’s dominance at the Tour de France that he tried to buy out the British team. He gave a farewell interview to Cyclingnews in 2016.

    Tinkov has been very critical of Putin’s invasion and for that the Russian government is putting the screws to him.

  3. macroduck

    I’ve seen speculation that the drag on GDP from inventories in Q1 likely means inventories will add to GDP in Q2. Well, maybe… But the math isn’t encouraging on that point.

    Inventory accumulation amounted to 1% of GDP in Q4 and 0.8% in Q1. Only one other time has two-quarter inventory growth been that fast in the past two decades. Three quarters of growth fast enough to turn inventories positive for Q2 last happened in 1997-98. Could happen, given the supply-chain mess, but not a good bet.

    That’s one reason the Atlanta Fed’s GDPNow estimate is at 1.6% growth for Q2, vs a Blue Chip median estimate of around 2.9%. A drag from trade is the other reason.

    1. macroduck

      Oh, and there’s a third reason for the softish GDPNow estimate for Q2, on which doesn’t show up in the Atlanta Fed’s component tables, but is evident in Menzie’s figure 2. Monthly GDP ended weak relative to the quarter as a whole, whick makes for a weak start to Q2.

      These signs of a soft Q2 GDP reading are all about the math. Underlying economic strength could be just fine. Underlying strength could even overcome the math and generate a healthy top-line number, but it won’t be easy.

  4. ltr

    https://www.globaltimes.cn/page/202205/1260730.shtml

    May 2, 2022

    Guangdong leads Chinese provinces in Q1 GDP while Xinjiang tops in growth

    A total of 23 domestic provinces in China saw above-average GDP growth in the first quarter, with Northwest China’s Xinjiang recording the fastest growth, while South China’s Guangdong Province reporting the largest economic output.

    Experts said the influence of the recent coronavirus outbreaks will manifest to a greater extent in the second quarter, but the concentrated rollout of government stimulus policies might also help China’s economy bottom out quickly and start to rebound in the third quarter.

    According to economic data released by China’s provinces and municipalities in recent days, Guangdong reported 2.85 trillion yuan in terms of GDP aggregate in the first quarter, the largest scale among all regions. It was followed by East China’s Jiangsu Province and Shandong Province.

    Hu Qimu, chief researcher at the Sinosteel Economic Research Institute, told the Global Times on Monday that the advantages of those provinces in population, manufacturing scale and innovative capabilities are strong even with certain external challenges, such as the coronavirus outbreaks in certain regions.

    However, some of those provinces have seen GDP growth slow down in the first quarter, indicating the influence of COVID is starting to show, though not to a great extent, Hu told the Global Times.

    Shandong’s GDP grew 5.2 percent in the first quarter, down from the 18 percent growth rate recorded in the first quarter of 2021.

    In terms of GDP growth, Xinjiang reported the fastest growth of 7.0 percent, while Northeast China’s Jilin Province had the slowest growth of -7.9 percent in the first three months….

    1. ltr

      http://www.news.cn/english/2021-12/09/c_1310361223.htm

      December 9, 2021

      Xinjiang’s tourism revenue up 17 pct in Jan-Oct

      URUMQI — China’s Xinjiang Uygur Autonomous Region received 170 million tourists from January to October this year, with its tourism revenue hitting 129.4 billion yuan (about 20.4 billion U.S. dollars) during the period.

      The revenue from tourism increased 16.8 percent year on year in the period, according to the regional culture and tourism department.

      During this period, a total of 127 government-funded cultural and tourism infrastructure projects were carried out, with a total investment of approximately 9.7 billion yuan.

      “Abundant high-quality tourism products and the vigorous development of new businesses, such as homestays, have effectively promoted tourism consumption,” said Liu Quan, deputy head of the regional culture and tourism department.

      This year, Xinjiang’s tourism industry has seen new features and trends….

      1. Barkley Rosser

        Well, I guess that settles it. Everything must be peachy keen in Xinjiang if so many tourists are going there! Can’t be anything bad happening to the Uyghurs there if tourists are piling in!

  5. AS

    I notice the following nonfarm payroll forecasts:
    1. 400k, Bloomberg as reported above.
    2. 400k Econoday.
    3. 415k Briefing.com
    4. 395k Briefing economist consensus.
    5. 410k, AS humble effort, using the sum of 14 separate employment category forecasts
    Will be interesting if the actual results are significantly different from above entries.

  6. GREGORY BOTT

    Nothing personally, but that kind of GDP “guesses” are as flawed and poorly created as bea “attempts”. Maybe, the real issue is poorly created models that need revision to work. Why then, use them???

  7. Moses Herzog

    Germany, as a nation, is FAILING the international community, until they stop purchasing Russian GAS and oil. Germany is calling back to its World War 2 Failures. Germany’s unique ability to be amoral and have no morals AT ALL. putting Germany parallel to China, no caring about the world around tham, and until Germany decides they don’t want o fund a war on Ukraine with purchases of oil and gas from Russia, Germany will have unique place in Hell. I have German blood, I feel so EXGTREMELY ashamed now, if you ask me tomorrow I won’t admit I have about 50% German blood. I’ll tell you I’m from Quebec , tomorrow. \Got it?? As long as germany purchases gas/oil from Russia, I’m from Quebec and I’m French now

  8. ltr

    https://news.cgtn.com/news/2022-05-03/Chinese-mainland-records-384-new-confirmed-COVID-19-cases-19J4waJ7pWU/index.html

    May 3, 2022

    Chinese mainland records 384 new confirmed COVID-19 cases

    The Chinese mainland recorded 384 new confirmed COVID-19 cases on Monday with 368 linked to local transmissions and 16 from overseas, data from the National Health Commission showed on Tuesday.

    A total of 5,690 new asymptomatic cases were also recorded on Monday, and 133,610 asymptomatic patients remain under medical observation.

    Confirmed cases on the Chinese mainland now total 217,836, with the death toll at 5,112.

    Chinese mainland new locally transmitted cases

    https://news.cgtn.com/news/2022-05-03/Chinese-mainland-records-384-new-confirmed-COVID-19-cases-19J4waJ7pWU/img/a3f40825821841ea8e58627ddb93a13d/a3f40825821841ea8e58627ddb93a13d.jpeg

    Chinese mainland new imported cases

    https://news.cgtn.com/news/2022-05-03/Chinese-mainland-records-384-new-confirmed-COVID-19-cases-19J4waJ7pWU/img/3c82dfb1bc754dc78f9fd06e2d0bc04f/3c82dfb1bc754dc78f9fd06e2d0bc04f.jpeg

    Chinese mainland new asymptomatic cases

    https://news.cgtn.com/news/2022-05-03/Chinese-mainland-records-384-new-confirmed-COVID-19-cases-19J4waJ7pWU/img/6658236afd0f457f9910a5afe27d18be/6658236afd0f457f9910a5afe27d18be.jpeg

  12. pgl

    https://www.msn.com/en-us/news/us/mark-levin-calls-supreme-court-leak-a-grave-assault-warns-american-institutions-will-collapse/ar-AAWSmW4?ocid=msedgdhp&pc=U531&cvid=0090216924f646a99c128aebc2fa5940

    Mark Levin is not upset the Supreme Court is about to overturn Roe. He does not care about the rights of women. Oh no – he is upset that this memo has seen the light of day. He is worried about lawlessness ending our Republic. Wait a second – we endured an entire 4 year Presidency where lawlessness was the order of the day for the White House. And Levin never complained about that.

  13. joseph

    I’m so old I can remember when Germany howled in moral indignation about the profligacy of the PIIGS and put them through years of grinding austerity and poverty to teach them a lesson. Seems that Germany doesn’t like a dose of their own moral medicine.

  14. pgl

    Murkowski and Collins are rightfully angry over the Alito memo that will soon overturn Roe. But I have a question for the two of them – WHAT DID YOU EXPECT from Trump’s nominees to the Court?

  16. ltr

    Germany’s unique ability to be amoral and have no morals AT ALL. putting Germany parallel to —–…

    [ Falseness and definitive racism; ceaseless vilifying of 1.4 billion people. ]

    1. pgl

      What Moses said was valid and had nothing to do with racism. Your little protests like this one are just dumb and dishonest.

    2. ltr

      Germany’s unique ability to be amoral and have no morals AT ALL. putting Germany parallel to China, no caring about the world around…

      [ The statement is false. The assault on China is false and definitively racist. ]

    3. AndrewG

      1. Do you ever directly address the people you are criticizing in the comments?

      2. Do you ever NOT defend the Chinese government? You seem to be more interested in good PR for Beijing than anything else.

  19. ltr

    https://english.news.cn/20220329/d7662525f7e14f21b1c75074133c6b5e/c.html

    March 29, 2020

    All flowers in full bloom make a beautiful spring

    BEIJING — “A single flower does not make spring, while one hundred flowers in full bloom bring spring to the garden.”

    President Xi Jinping has quoted this old Chinese saying to express his vision on the common development of the world and to convey his appreciation of diversity and inclusiveness.

    It comes from a popular collection of Chinese aphorisms that was first compiled in the Ming Dynasty (1368-1644) and later supplemented by literati throughout the Qing Dynasty (1644-1911).

    The blossoming flowers proverb stands out today because of its rich philosophical content. It addresses the dialectical relationship between part and totality, the interconnectedness of things, and the respect for diversity as a law of nature.

    It helps explain a China that has invested itself in the Belt and Road initiative, international import expos, building a community with a shared future for humanity, not to mention the long-term commitment to opening-up.

    “We will unswervingly pursue a win-win strategy of opening up, seeking development impetus from the world and contributing more to the world with our own development,” said Xi in an October 2020 speech…

    1. ltr

      “According to official information, in March 2022, 146 countries and 32 international organizations had signed cooperation agreements for the Belt and Road Initiative.”

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