One of the interesting things about the current debate over whether we’re about to go into a recession or not is the multitude of indicators that different people glom onto — without any expressed formal rationale for picking one over the other. See this list of people in the recession camp, here.
That’s why I found this (pre-pandemic) systematic comparison of the predictive content of indicators, by David Kelley of interest. The key figure is reproduced below.
The Conference Board’s Leading Economic Index is best at very short horizons. A literal reading of the August reading indicates we’ve been in a recession for a while. That being said, the 10yr-Fed funds spread is one of the components of the index, and one of the main drivers of the change over the last six months. If one is skeptical of this spread, one might be skeptical of this reading (the other main drivers have been consumer expectations of business conditions, and ISM new orders).
The 10yr-3mo spread (used in this post) is best at horizons of a year.
From the conclusion:
The results of this article show that at horizons roughly one year ahead and longer, the long-term Treasury yield spread has historically been the most accurate available “predictor” of recessions. That said, leading indexes have been better than individual leading indicators or financial data at signaling recessions in the near term. The ROC threshold indexes constructed here have also performed well as recession predictors in the near term because they are also effectively leading indexes that combine the information in the inputs to provide a more accurate measurement of coming economic activity.
Note these are predictors. They’re not indicators of whether we’re in a recession (e.g., Sahm rule).
Different topic – South Korean foreign direct investment into the US:
https://www.msn.com/en-us/money/companies/south-korea-is-going-big-on-american-manufacturing-the-battery-belt-could-benefit-the-most/ar-AA1r3Iui?ocid=msedgdhp&pc=U531&cvid=6cd9eb0ca38f4dcaa5071b84e991be80&ei=18
South Korean companies are investing billions of dollars in the US to take advantage of two big laws meant to boost American manufacturing.
A Financial Times analysis of United Nations data found South Korean companies invested $21.5 billion in US projects in 2023, more than any other country. South Korea overtook Taiwan, which held the top spot in 2022. Samsung, LG, and Hyundai are among the South Korean companies committing billions of dollars to build facilities in the US to make electric vehicles, batteries, and semiconductor chips. Much of the money is flowing to Southern states, boosting jobs in the so-called Battery Belt. Yeo Han-koo, South Korea’s former trade minister and a senior fellow at the Peterson Institute for International Economics, told Business Insider that US and South Korean interests in emerging technologies were perfectly aligned. Amid geopolitical uncertainty, the Biden administration aims to decouple US supply chains from China to compete in the EV and chips races. Meanwhile, South Korea — a longtime US ally — hopes to build its global profile in high-tech and auto manufacturing. In particular, Yeo said, the 2022 Inflation Reduction Act and CHIPS and Science Act provide financial incentives for companies to invest in green technology in the US, bolstering South Korean commitments. “In addition to these new geopolitical factors, these massive subsidies and tax incentives from the IRA and the CHIPS and Science Act really provide a good motivation for these Korean companies to invest in the US,” Yeo said.