Assessing the Business Cycle, Mid-May 2019

Several key series look like they have peaked; nowcasts indicate slowing growth. Forward looking indicators look “iffy”.

Figure 1: Nonfarm payroll employment (blue), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), and monthly GDP in Ch.2012$ (pink), all log normalized to 2019M01=0.  Source: BLS, Federal Reserve, BEA, via FRED, Macroeconomic Advisers (5/3 release), and author’s calculations.

Several series closely followed by tne NBER’s Business Cycle Dating Committee (BCDC) have seemingly peaked — although it could be growth resumes (or series get revised upwards). Industrial production was revised downward in latest release.

Most everybody agrees on a short term deceleration in growth in Q2.

Figure 2: Quarter-on-quarter SAAR GDP growth 2019Q1 advance release (blue), Atlanta Fed 5/16 GDPNow (red), 5/17 NY Fed GDP Nowcast (teal), and 5/17 Macroeconomic Advisers nowcasts (black). Source: BEA, Atlanta Fed, NY Fed, Macroeconomic Advisers, author’s calculations.

And the term spread (10yr-3mo) has inverted again.

Figure 3: Baker, Bloom and Davis economic policy uncertainty (EPU) index (dark blue, left scale), centered 7 day moving average (red, left scale), and 10yr-3mo constant maturity Treasury yield, % (teal, right scale). Orange shading denotes Trump administration. Source:, Federal Reserve via FRED, Treasury Department, and author’s calculations. 

What is interesting is that the term spread has not been inverted with economic policy uncertainty at such elevated levels, over the period 1985 onward during which we have such an EPU index.

Note the overall index is much more subdued than the trade policy categorical index. As noted earlier, other capital goods imports and equipment investment are declining.


Employment, as measured by the household survey, is declining, even if rising by the establishment survey.

Figure 4: Three month annualized growth rate of nonfarm payroll employment (blue), civilian employment adjusted to NFP concept (red) and civilian employment (teal). Source: BLS via FRED, and author’s calculations.


36 thoughts on “Assessing the Business Cycle, Mid-May 2019

  1. pgl

    Oh my – I bet the usual suspects will scream “Trump Derangement Syndrome” But Barkley has got this!

    ‘This is motivated by running on in the econoblogosphere to Trump supporters who when confronted with hard facts they cannot refute revert to name calling that those stating actual facts are suffering from “Trump Derangement Syndrome” (TDS). I have recently seen it thrown out “liberally.” What is going on here?’

    1. Moses Herzog

      Are the kids at school calling Barkley Junior names again?? Did someone call him a “libtard” too?? Aaaaaawwww!!! Life is so tough for little Barkley. What year exactly did Barkley Junior learn political opponents trade barbs?? This is why Republicans win on rhetoric 80%+ of the time. They continually attack their opponent’s weak spots while liberals of Junior’s ilk go running to Mommy telling her they got a boo-boo on the recess playground. Newsflash: NO ONE CARES ABOUT BARKLEY JUNIOR”S BOO-BOO and it doesn’t justify a blog post.

      1. Barkley Rosser

        Actually, Moses, my Econospeak post that you ridicule is an expanded and corrected version of Comment #130 from the thread here on CoRev and Soybean prices 800, with CoRev making Comment #131 to accuse me of not understanding the Mueller Report. It was CoRev’s repeated and increasing use of “TDS” in that thread that triggered my original comment here and my post on Econospeak, which has been picked up also on Angry Bear, with the few comments on both in basic agreement.

        On that thread CoRev initially applied it to me when I was nailing his behind too hard. He eventually used it on 2Slugbaits more than he did on me, and he also applied it to pgl and once to Dave. A couple of times he made it a general accusation so maybe you and Menzie and some others are included also, although maybe you are just jealous that your slams at him were not tough enough for him to specifically accuse you personally of TDS, you poor thing. I have seen others also throwing it out similarly when they are having their lack of facts blasted at them too unavoidably.

        At the end of my comment here and also my Econospeak/Angry Bear post I coined “RTDS” for the CoRevs of the world, those suffering from Real Trump Derangement Syndrome, believing and spouting his lies repeatedly even as those lies are repeatedly exposed.

        As for you, Moses, who really ought to know better, maybe you are your own special case, suffering from BRDS, or Barkley Rosser Derangement Syndrome. Tsk tsk, too bad, :-).

        1. Moses Herzog

          @ Barkley Junior
          I already saw this particular episode of the Simpsons.

          Remember what I advised. A plant based diet staves off dementia, and “superfood” Legumes are the best route in my opinion. You might try some Beyond Burgers too. You can get through this.

          1. Barkley Rosser

            Sorry, Moses, but I have never seen an episode of the Simpsons, and I am not about to start now on the urging of somebody suffering from BRDS.

          2. pgl

            The kids have respect for grandpa – cool. Now if you could only some respect for elder ladies who actually know how to lead.

  2. 2slugbaits

    This morning I was watching This Week and during the roundtable discussion Chris Christie claimed that Obama never saw a 3% GDP quarter. His comment went unchallenged then, so it’s time to correct the record. By my count there were twelve quarters with GDP SAAR of 3% or greater. Was Christie lying or is a relaxed attitude towards the facts contagious among Trump supporters? Maybe we should rebrand TDS to “Truth Derangement Syndrome.”
    See BEA table 1.1.1.

    1. Moses Herzog

      @ 2slugbaits
      Outstanding comment. I assume that’s an ABC show. Now don’t take this as disagreement with your stellar comment, as it is not. At the same time, I’m wondering if this isn’t more connected to the fact Chris Christie is now an employee of ABC network, and they don’t want to spotlight him intentionally lying to viewers as regards factual events at the same network he is being employed to “provide analysis”.

      Some may already be wondering why ABC Network employ a man who caused deaths by his intentional obstruction and stoppage of the George Washington Bridge on his personal order to political lieutenants (who were sent to prison for following Christie’s orders).

      Anyone who thinks those two people sitting in prison for 3 and 1/2 years did what they did without either direct orders from Christie or his tacit permission has no clue how politics works in New Jersey. Christie’s reward for obstructing and stopping emergency vehicles doing their jobs trying to save lives is getting paid to have his fat pudgy face on TV telling MORE lies. Welcome to the REAL “American dream”.

      1. pgl

        “I’m wondering if this isn’t more connected to the fact Chris Christie is now an employee of ABC network”.

        I did not know that. What is his pay? And does it include a lucrative doughnut allowance!

        1. Moses Herzog

          For over a year now it looks like. I noticed it around November sometime when they had Christie doing studio work during the elections:

          Christie looks so cute in a pink tie and the waistline of his trousers up by his nipples, don’t you think??

          1. pgl

            He is a mess. But that might be forgiven if he did not run around like some know it all. As governor, he ripped off the teacher’s pension to pretend he was balancing the budget but in truth he ruined New Jersey’s fiscal situation in his zeal to give tax cuts to rich people. Trump may be dishonest but he does not hold a candle to fatso.

    2. pgl

      And governor fatso had nothing to do with BridgeGate either. Christie lies almost as much as Trump and yet the press eats up what he says. OK – that is what happens when one bring the Christie Kreme doughnuts!

    3. pgl

      I’m providing this link for Christie on the hope he can read the actual data in Table 1.1.1. Percent Change From Preceding Period in Real Gross Domestic Product over his enormous waist line:

      If we look at the Annual data, we did not have 3% growth in either 2017 or 2018. Now we can see some quarters where BEA reports 3% growth. A lot of them occurred when Obama was President. Is Christie dumber than rocks or just another serial liar. Pass the doughnuts!

    4. baffling

      2slugs, i think we should better understand the “false” numbers that keep coming out of the trump and republican camp. they have a pretty good understanding of live television and reporters: most reporters are not smart enough, or at least have the depth of knowledge, to fact check in real time. they take advantage of this, that most reporters are afraid to “challenge” those numbers in real time, because the reporters may know the number is not correct-but they do not know what the correct number should be. so as long at you are not, for instance, a fool like corev who would argue something silly like the sky is not blue, it is green, then the trumps of the world can get away with throwing out numbers that are not common enough to have widespread understanding of correctness. for instance, christie new his number was not correct, but he was also confident that the reporter did not know the true answer. so he takes the chance and gets away with it. now it is out in the public, and even harder to refute the next time he pulls the same stunt on an unknowing reporter. i have only seen a few, like catherine rampell’s takedown of steven moore, where those in the news have the knowledge on hand to respond affirmatively to such lies. conservatives had taken advantage of a weakness in the news arena.

      1. pgl

        “christie new his number was not correct, but he was also confident that the reporter did not know the true answer. so he takes the chance and gets away with it”.
        His numbers are never correct but he shouts very loudly so he must be telling the truth – right? As Trump would say – “he said it strongly” which makes the lie the truth with these clowns.

  3. Moses Herzog

    This should be an interesting story, and this was one of the items that I was surprised Mueller wasn’t chasing after harder.

    Maybe Mueller knew eventually this is something that would get out and for just once he wouldn’t have to worry about Republican Senators blocking it, that there was a chance German regulators would act in their ally’s best interest. Either way this rumor has been percolating for literally YEARS now and I’m wondering of the Southern District of New York is making proper efforts on this since William Barr is now working as donald trump’s personal defense attorney. I suspect Deutsche Bank will fight it because they have MANY other white caller criminals, organized crime, large scale drug dealers parking their money at these banks and if they get wind federal level German regulators or others are poking around Deutsche Bank’s accounts they will be looking for other venues to park their money. This is why clueless people such as Rogoff telling us digital money will lower crime are living in ivory tower fantasyland ONCE AGAIN, as banks will just go on finding ways to park blood money to increase the assets of their bank—digital or otherwise, paper cash has nothing to do with it.

    1. Moses Herzog

      “White collar” I obviously should have typed. That’s one of my better ones. For some reason if I’m not looking at the screen when typing (which is semi-often) my mind wants to take whatever word I’m typing and make it the phonetic sound of the word or the more commonly used of the two. It’s not actually a “typo” but….. I know the difference but I type the wrong one. Kind of like when you’re driving your car to go to one place, and you know where you’re going but you turn the car on a street that you often head down on a near daily basis. There has to be a word for that—if anyone knows enlighten me. Maybe just a F Up

    1. pgl

      The end of this story shows how much utter BS Team Trump spreads:

      “The Trump Organization said it had “no knowledge of any ‘flagged’ transactions with Deutsche Bank”. Kushner Companies said any allegation involving its links with Deutsche and money laundering were “totally false”. Among Trump’s claims of a “fake news” conspiracy against him, the Times is a prominent target. In a statement to Reuters about the Deutsche Bank report, a Kushner Companies spokeswoman sounded a familiar note, saying the paper “tries to create scandalous stories which are totally false when they run out of things to write about”.

      So Jared is abusing Reuters to trash honest reporters at the NY Times. I know a few Reuters reporters. They will dig deeply into this and likely write something that proves Jared lied again.

        1. Barkley Rosser

          No, 2slug; he says it is supposedly over 950,000 of those. Somehow I think he has blown the popsicle stand here, having gotten nailed too hard himself on his RTDS, although probably I have spoken too soon.

          1. 2slugbaits

            Well, I guess being off by an order of magnitude is no big deal in Trump World.

  4. Barkley Rosser

    It is unsurprising that the indicators are showing a lower growth rate for Q2. When that Q1 number came out, quite a few of us forecast that would be likely given the large increase in inventories that happened in the final numbers. That usually suggests some deceleration of the growth rate.

    1. pgl

      CoRev would accuse you of TDS for looking at the components of the Q1 increase. Of course he goes way down into the weeds on soybean prices. Or was he just smoking weed?

    2. Willie

      Indeed you did. What I find interesting is that the forward looking indicators aren’t so hot. I’m sticking to my fearless prediction of a downturn sometime in 2020. It may not technically be a recession, but I don’t expect strong growth over the next 18 months. There are too many negatives piling up – tariff fallout, farm prices dropping, inventory buildup, slowing construction so far as I can observe it. And, political chaos that means no infrastructure plan or anything else useful will get done. There will be plenty of grandstanding, plenty of heat and smoke about borders and Iran, but not much else. If Trump caves to Bolton and decides a war with Iran is in the interests of being reelected, then I would expect a recession to hit pretty quickly, just as it did under GHW Bush. Unlike that Gulf War, the US won’t have any friends, which will make things even more problematic.

      1. Barkley Rosser


        I continue to refuse to make a forecast about what the US or world economy either will be doing in Q4 2020, even as I see a near term deceleration of growth for the obviously stated reason, with the indicators Menzie has posted consistent with that. There are just too many things that are unclear and up in the air, including possible wars, for me to be confident about making such a forecast. I realize that Menzie and Jim have their probability indicators, and I applaud them for that, but even for that I shall hold back for now.

        1. Willie

          Barkley Rosser,
          Being a mere outhouse economist rather than the real thing means I can be shamelessly loud, proud, and wrong. Being tied to construction for years means that my paranoid recession detector goes off urgently when there is a downturn in the air.

          There may or may not be a technical recession between now and 2021, but I see the end of growth over 2%, with potholes along the way.

  5. pgl

    Fifth Minor Has Died In U.S. Custody At The Southern Border

    On Tuesday, a 16-year-old boy was found dead at a checkpoint on the U.S.-Mexico border, the fifth underage immigrant to die in American custody. His cause of death is yet unknown. According to CNN, the unnamed teenager follows an unidentified 2-year old, 16-year-old Juan de León Guttiérez, 8-year-old Felipe Gomez Alonzo and 7-year-old Jakelin Caal Maquin. The most recent tragedy comes at a time when facilities at the border are being overwhelmed by the number of immigrants, many of them families, crossing over.

    1. Menzie Chinn Post author

      pgl: We shouldn’t be shocked by this news. The principle of deterrent embraced by Mr. Trump means it is — from his perspective — a *good* thing.

      1. Moses Herzog

        How is “the principal of deterrent” working on mass deaths caused from direct and indirect effects of hurricanes?? Are those Puerto Rican deaths lowering the seasonal count of hurricanes?? (I know you get this point, just asking rhetorically)

        1. mrp

          If you believe that an increase in the intensity and count of hurricanes is solely a man-made phenomenon, then the deterrent is clear.

          1. Moses Herzog

            The only people who ever use the word “solely” in reference to man-made problems are the sycophant MAGA morons on FOX news. Profiteers calling themselves “news” who take extreme arguments of the opposite side to rationalize their own extreme views, such as “Coal is good for America”.

  6. pgl

    Stephen Moore Update:

    Former almost-Federal Reserve Board nominee Stephen Moore explained to radio station WMAL why he would not return to CNN as an analyst: “you go to restaurant and you get salmonella, you don’t go back to that restaurant.” “They basically begged me to come over from Fox and they begged me to sign a renewal for my contract,” he said. “Then literally, the day after I was announced for the Fed, they turned their knives against me. They were vicious and vile.”

    Two reactions: (1) Moore is certainly a whiny little boy, but (2) CNN is better off not having this lying clown on their shows.

  7. Neil

    Isn’t the personal income data a bit misleading at the moment? The weakness is mostly a function of farm income and the timing of dividends. Wages and salaries are still mostly growing in real terms.

    1. Menzie Chinn Post author

      Neil: At quarterly frequency, subtracting National Income: Farm proprieters income with IVA from “personal income excluding transfers” changes nothing of the contours of the time series. Maybe it looks different at monthly, but couldn’t find relevant data. If you have it, would welcome your graph.

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