So You Think We Might Be In a Recession Today (Part IV)?

Following up on Part I, Part II, and Part III.

Lewis-Mertens-Stock Weekly Index, using data through June 25, still in positive range.

Source: FRED, accessed 7/3/2022.

So too is the OECD Weekly Tracker, using data through June 25:

Source: OECD, accessed 7/3/2022.

Google Mobility index is above 2019 levels.

Source: Torsten Slok, “Slowdown Watch,” Apollo, July 2, 2022.

Same-store retail sales down, but still up from 2019 as well (and up from 2019 trend, as far as I can tell):

Source: Torsten Slok, “Slowdown Watch,” Apollo, July 2, 2022.

Credit indicators are up, from bank loan growth, to outstanding credit card debt. Both indicate optimism about conditions near term.

Source: Torsten Slok, “Slowdown Watch,” Apollo, July 2, 2022.

Source: Torsten Slok, “Slowdown Watch,” Apollo, July 2, 2022.

What is true is that some broad measures of activity in the last months are down (namely monthly GDP, consumption in the last month). However, employment and income ex. current transfers continue to rise. Monthly GDP in particular exhibits sometimes substantial revisions, as discussed in this post.

Figure 1: Nonfarm payroll employment (dark blue), Bloomberg consensus for NFP (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) (7/1/2022 release), NBER, and author’s calculations.

None of the foregoing commentary should be taken to mean that we won’t be in a recession soon, or by end-2023. Indeed, an IGM-FT poll in June indicated 70% of economists polled see a recession in the next year. (More on the poll in this post.)


56 thoughts on “So You Think We Might Be In a Recession Today (Part IV)?

  1. Moses Herzog

    I actually got past the FT paywall on the original post if anyone can believe that and DL’ed it as a pdf. It’s fun stuff. I think my love of sports in my early teens has always made me fascinated with gazing into the future. I’m still pretty neutral on if there will be a recession. And I think U.S. inflation will be contained by December 2022 (if not earlier). And I will add this opinion which Menzie and many other well-credentialed economists will probably disagree with. If we enter a recession, I think about 75% of it should be laid at the feet of the Fed for being too eager to raise rates, which in my opinion, demand has little to do with our inflation right now, which is why I don’t think raising rates is helpful. Or put it another way, raising rates right now does more damage than good.

    1. macroduck

      “I think my love of sports in my early teens has always made me fascinated with gazing into the future.”

      I’m shocked, shocked to find what sounds like an interest in point spreads going on in here!

  2. macroduck

    Menzie, apologies for yet another egregiously off-topic comment –

    I kinda think environmental issues are more important than economic issues because economic performance relies on the environment, and so do a bunch of other things. Diminished economic capacity due to environmental degradation cannot be overcome by better business practices, by quantum computing or by clever monetary policy. So let’s all pretend this is a comment about economics.

    These days, attention to the environment is mostly focused on climate change, but it turns out (and some of you know this) there are other environmental problems afoot. The UN has kindly provided a list of problems which share some worrying characteristics. They all:

    1) are cumulative – they keep piling up
    2) involve a tipping point, past which –
    3) they threaten economic and cultural collapse

    The latest examination of the “planetary boundaries” on that list is here:

    Problem is, that document is well over 200 pages long and the planetary boundaries section is buried. Fortunately, the Stockholm Resilience Centre has a brief, palatable treatment of the same material here:

    One sad recent development is that the U.S. Supreme Court has made up a brand new legal doctrine which denies the federal government the authority to do anything about any of these potentially catastrophic issues except through legislated laundry lists of specific remedies. Such laundry-lists are beyond the intellectual and institutional capacity of Congress, and I don’t mean that as an insult. Just impossible to do. If you think the abortion ruling was bad, well the power-plant emissions ruling has quite possibly killed large parts of our future.

    1. macroduck

      Oh, I forgot to mention, these nine potential catastrophes interact and overlap. Two tipping points tipped is potentially way worse than twice as bad as just one.

    2. CoRev

      Trust me says MD, the3 smartest environmentalist in the room, because: ” Such laundry-lists are beyond the intellectual and institutional capacity of Congress, and I don’t mean that as an insult. Just impossible to do. If you think the abortion ruling was bad, well the power-plant emissions ruling has quite possibly killed large parts of our future.”

      Yup Beyond Congress’s capabilities to legislate a solution. Only we the smartest environmentalists know the solution, and they are only within the Federal agencies.

      Above all, let’s rely on a 2015 article without reviewing any evolving science since.

      The most important issue is the failure to consider the cost benefits of mitigating the environmental/climate issues versus their economic impacts. Because as MD says: “I kinda think environmental issues are more important than economic issues because economic performance relies on the environment,…” Kinda thinking is what has gotten us into this current near world-wide economic problem. The unthinking issuance of war on fossil fuel policies is the cause of much of today’s inflation. KINDA THINKING is UNTHINKING, which leads to the economy we have today, and the virtue signalling of the horrid war on fossil fuel policies.

      1. pgl

        Gee CoRev – your gibberish is getting worse by the day. Please seek professional help before they take you away.

      2. macroduck

        Wow, CoVid, you aren’t even trying any more. For you, any lie will do, as long as it contradicts a truth you don’t like. Straight from the “fake science” playbook.

        The UN document is from this year, not 2015. (How exactly does the date of publication make an article wrong?) The 2015 link is just for convenience. The UN publication isn’t in a per-reviewed journal? That’s just pure “fake science” trickery – you’ll say anything to cast doubt. The UN report brings together the results of a large scientific literature. Each of the UN’s supporting documents includes its own bibliography, each chock-full of peer-reviewd research.

        And yes, I have a political agenda; I want policy based on facts, not lies, spin and innuendo. With so much at stake, I think supporting some policy because it’s the choice of some political movement is idiotic. Only selfish, small-minded twerps line up behind some policy because that’s what the leaders of their silly tribe tell them to do.

        Oh, and the benefit which justifies the cost? Survival.

        1. CoRev

          Misdirection and deflection: “The UN publication isn’t in a per-reviewed journal? ”

          More deflection: “And yes, I have a political agenda; I want policy based on facts, not lies, spin and innuendo.” Please show where these are in evidence in my comment.

          Where and when has the IPCC made this claim of survival being threatened: “Oh, and the benefit which justifies the cost? Survival.”

          It’s easy being an ideologue since all that is need is blind belief and “kinda thinking” about a subject without actually analyzing the material. That’s just pure “fake science” trickery.

          1. pgl

            Why do you persist in wasting everyone’s time with this sandbox behavior. All you do is lie like a rug and then accuse people who call you om your lies of being a liar. Look CoRev – it may be a shame that the other little kiddies kick you out of the play ground but can you blame them?

            I would ask you to grow up but by now it is evident that you do not even want to try.

      3. Macroduck

        By the way, notice how CoVid was first in line to respond to my off-topic comment. And how he tossed in a bunch of poorly argued, kitchen-sink stuff to try to undercut the results of established science? The whole point, for CoVid, is to give casual readers an opportunity to doubt. It’s the underlying purpose of the entire “family science” effort to cast doubt on science, so that non-science, and nonsense, can replace science in the public mind.

        1. Moses Herzog

          “CoVid” hahahaha. I mean it is funny, but to me it;’s more like being forced to read what crap wad Barkley has come up with recently just to be argumentative or contrary or convince people “I was the ‘first’ to say……” such and such. Covid effects the lungs, With Barkley and CoRev it’s more like meningitis, this thing that has infected and worsened the performance of your brain, that now you play hell getting the puss and gangrene wad out of your brain. Meningitis fits better. William Burroughs used to talk about “word virus”. It’s kind of like that. Like you innocently walked into a public gathering place and then some one ripped flatulence out of their mouths.

          1. Barkley Rosser


            You have been correct that back before Putin invaded Ukraine I was accepting a too low probability of such a full-scale invasion happening, and you have posted about this more times than I can count. You have also now noticed that this led me also to discount the severity of the problem of German reliance on Rusisian gas. Yep, got me on another one.

            But, frankly, you have nothing since the invasion started, nothing that actually holds up anyway, and you listed nothing here, just asserting that somehow I am as inaccurate as CoRev, which is just ridiculous.

            I am not going to waste peoples’ time by listing the large number of blatantly false and stupid things you have said since Putin invaded Ukraine, which have been previously pointed out, but, really, Moses, you need to get it together and deal with this obsession you have with lying about what I say every other post you put up here when it is wildly off-topic most of the time. It is really out of control

    3. CoRev

      Unless we forget, on another comment thread: ”
      MD finally make a meaningful statement: “For some of us, economics is more than just a dry exercise. Economics informs policy and policy is made through politics.”

      The result of those policies are evident in today’s economy. Do you agree or not?”

      MD kinda thinks environmental issues are more important than economic issues. I estimate (don’t kinda think) that a large portion of today’s inflation is due to environmental policies, in particular the war on fossil fuels. In 2021 the world’s GDP is estimated to be~ $94T. What is the cost of the inflation due to the unthinking, virtue signalling obeisance to these environmental policies?

      The costs are immediate. What are the benefits?

      1. pgl

        I read his other comments. Let me congratulate you on a superb job of taking things totally out of context and being completely misleading. I bet your mommy is so proud of her favorite retarded son.

      2. pgl

        “The result of those policies are evident in today’s economy.”

        Why yes – Trump’s ignoring COVID has created some severe supply disruptions. And his appeasing Putin and belittling of NATO lead to that invasion of Ukraine which has truly impacted food and oil prices. Yep CoRev – your boy was a consequential President for sure. BAD consequences. Take a bow!

        1. CoRev

          Barking Bierka – the NYC Jerk makes this claim: ” And his appeasing Putin and belittling of NATO lead to that invasion of Ukraine which has truly impacted food and oil prices.”

          Actually, he (Trump) warned European leaders, particularly German leaders, that relying on Russian energy was giving Russia too much power over them. The reason Europe chose Russian energy was doing so allowed them to virtue signal how well they were performing in the climate wars. Virtue signalling by their own war on fossil fuels, which were readily available within their own or near neighbor’s borders.

          It’s these “kinda thinking” (instead of decent analyzing) options that result in rising energy costs and shortages.

          1. pgl

            This is the best you can do to defend Trump? No wonder Trump relied on incompetents like Rudy G. He had nothing better than a drunk with chocolate running down his face. I guess a dumb dog chasing its own tail was a no go.

          2. CoRev

            Barking Bierka – the NYC Jerk, why did you ignore your own claim: ” And his appeasing Putin and belittling of NATO lead to that invasion of Ukraine which has truly impacted food and oil prices.”? My response wasn’t a defense of Trump, but a counter to your claim of what caused the Russo/Ukraine war and rising food and energy prices (which you failed to mention).

            Sometimes the Trump hatred must really dim the visibility in NYC dwelling.

      3. pgl

        “I estimate (don’t kinda think) that a large portion of today’s inflation is due to environmental policies, in particular the war on fossil fuels. In 2021 the world’s GDP is estimated to be~ $94T.”

        What model did you pull out of the trash can to come up with this totally messed up number? You know – anyone can play this game. Like my model of the deaths caused by Trump’s anti-immigrant agenda which I put at 6 billion people so far. Yea I know I made up an insanely stupid number but I bow to your finesse at coming up with an even more insanely stupid number.

        And we criticize Princeton Steve of making up garbage as he goes. No – he is no match for the CoRev!

        1. CoRev

          Barking Bierka – the NYC Jerk questions a number that is readily available with a 2 second search. Compounding his laziness he then says: ” Yea I know I made up an insanely stupid number but I bow to your finesse at coming up with an even more insanely stupid number.”

          Bierka- the NYC Jerk just can not help embarrassing himself. He criticizes others for making up garbage as he goes. No – he has no match for lying and over reacting.

      4. pgl

        OK my apologies for letting CoRev’s stupid writing technique led me to not get that he is saying world GDP is now running near $94 trillion per year. Fine but he was supposed to be telling us the alleged losses from some allegedly bad economic policy. Now is he saying that these cost are 100% of world GDP? Then he is dumber than any of us give him credit for.

        Now maybe his estimated “cost” = 0.000000001% of world GDP. Who knows? This moron cannot write what his “estimate” is which is likely because he has no effing clue what his “model” predicts as he has no model.

        But I’ll let the rest of you do the arithmetic. Poor CoRev cannot as he is still trying to figure out 2 plus 2.

        1. CoRev

          Oh my, Barking Bierka – the NYC Jerk apologizes, then let’s the JERK take over. It’s sad really.

          1. pgl

            Actually it’s your preK teacher that owes you an apology as she clearly failed you during basic writing skills classes. Now go back to chasing your own tail.

      5. 2slugbaits

        CoRev You are way out of your depth here. Fossil fuels incur costs that are not fully captured in the price paid by consumers. That means we are overproducing and overconsuming fossil fuels. You never took economics so it’s unlikely that you would know this, but one of the first principles you learn in econ is that optimal policies equalize welfare across time. Drill baby drill might make you better off today, but it makes future generations worse off. Economists think in terms of a carbon budget. If you had the math skills (i.e., differential equations) to understand Hamiltonians and optimal control theory, then you wouldn’t be posting such nonsense. Optimal control theory estimates the optimal path or stream of the control variable (i.e., carbon growth) subject to a constraint on the state variable (i.e., total carbon parts per million consistent with a target temperature change). That’s how adult economists view things. What you’re spewing is the kind of crackpot “economics” you’d find on low rent Fox cable channels.

        So let’s review your qualifications:
        (1) You struggle with logs
        (2) You struggle with basic time series principles
        (3) You don’t understand commodity markets
        (4) You don’t understand basic climate physics
        (5) You adore Putin and Trump
        and lest we forget…
        (6) You believe in ghosts and UFOs

        1. pgl

          Can we ask what CoRev uses to forecast inflation? We do know Princeton Steve is “on record” of trusting the discredited outdated Quantity Theory of Money and based on CoRev’s comments, he is a disciple of Princeton Steve’s macroeconomic “model”.

          1. CoRev

            OH sheesh, Barking Bierka – the NYC Jerk now appears to be confusing inflation with recession.

        2. CoRev

          More gibberish from 2slugs. When you say: ” optimal policies equalize welfare across time.”, where that list of Biden’s optimal policies ?

          “Drill baby drill might make you better off today, but it makes future generations worse off.” Peak oil has been a false claim since 1956, and the claim CO2 from fossil fuel is to blame for (global warming/climate change/climate crisis/climate …, etc.) has always been false.

          So when you say: “… the control variable (i.e., carbon growth) subject to a constraint on the state variable (i.e., total carbon parts per million consistent with a target temperature change).” you just show your ignorance. It’s not carbon that is the Green House Gas. Carbon is an atomic element, and there is no growth in the amount of an atomic element. There may be growth in with what they are combined, but that creates something different. You seem clueless to how many different things are composed of carbon and ??? You see C (carbon) is not CO (carbon monoxide) is not CO2 (carbon dioxide) and definitely not C3H8 (propane) a major component of LPG or any of the other carbon-based fuels.

          Getting the absolute fundamentals wrong (C is not CO2), and even CO2 is not the control variable. Even your Kaufmann paper made that point. False claims and misunderstanding fundamentals shows just how ignorant and deluded you are. Like your fellow ideologue, MD, you don’t have to think nor analyze, but blindly believe.

        3. Barkley Rosser


          Uh oh. I suspect that when you mention CoRev having to “struggle with logs” he thinks that you are referring to forestry management, :-).

          1. pgl

            July 4, 2022 at 4:38 pm

            It seems CoRev thinks the Quantity Theory of Money models Keynesian business cycles. Now even Princeton Steve is not THAT STUPID.

    1. pgl

      Clearly there is a need for anti-trust enforcement. After all – we have the technology to let granny understand what her little kiddies are saying to her and who would want that not to happen? Price controls are great at times but quality control is tougher to enforce without a truly competitive market.

  3. New Deal democrat

    Prof. Chinn:

    Just to add a little context to the Redbook consumer spending numbers, YoY nominal spending has decelerated from about 18% last summer to about 13% now. Since consumer inflation has increased from about 5% YoY last summer to about 8% now, an estimate is that “real” YoY consumer spending has slowed from about 13% last summer to 5% now.

    But because YoY measures can miss turning points, my rule of thumb is that when a YoY measure falls/rises by more than half its level from zero, it has probably already peaked/bottomed on a monthly basis. Needless to say, Redbook has done that. On the other hand, 5% YoY real growth is still pretty good.

    I think Redbook works as a weekly back of the envelope estimate of consumer spending. I presently count it as a decelerating positive on that basis. If the nominal YoY value falls to 50% or less of peak, I.e., 9% or less, then it’ll be a negative.

    P.S. Because consumption leads employment by 3-6 months, and real retail sales have slowed sharply, since February I have expected nonfarm payroll growth to slow sharply as well. And it has slowed from roughly 500,000 jobs added per month to 400,000 in the last three months. I would not be surprised by a further, sharper slowdown in this coming jobs report on Friday. Bill McBride quotes the NBER this morning as reiterating that they give extra weight to payrolls. Hence, no recession now, but based on the above relationship a recessionary negative jobs number may not be far off.

  4. ltr

    June, 2022

    Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860-2020
    By Ellora Derenoncourt, Chi Hyun Kim, Moritz Kuhn & Moritz Schularick


    The racial wealth gap is the largest of the economic disparities between Black and white Americans, with a white-to-Black per capita wealth ratio of 6 to 1. It is also among the most persistent. In this paper, we construct the first continuous series on white-to-Black per capita wealth ratios from 1860 to 2020, drawing on historical census data, early state tax records, and historical waves of the Survey of Consumer Finances, among other sources. Incorporating these data into a parsimonious model of wealth accumulation for each racial group, we document the role played by initial conditions, income growth, savings behavior, and capital returns in the evolution of the gap. Given vastly different starting conditions under slavery, racial wealth convergence would remain a distant scenario, even if wealth-accumulating conditions had been equal across the two groups since Emancipation. Relative to this equal-conditions benchmark, we find that observed convergence has followed an even slower path over the last 150 years, with convergence stalling after 1950. Since the 1980s, the wealth gap has widened again as capital gains have predominantly benefited white households, and income convergence has stopped. *


  5. pgl

    Off topic but important:

    South Dakota Governor Kristi Noem did her best to deflect how she and her state would handle the case of a 10-year-old girl who became pregnant after being raped. Gov. Noem appeared on CNN Sunday and discussed her state’s anti-abortion law, which prohibits such procedures except to save the life of the mother. The Governor immediately tried to change the subject and talk about how a monster could do such a thing and how people like him needed accountability. CNN’s Dana Bash pressed her to get back on topic, and the Governor danced around the subject. The 10-year-old lives in Ohio and was 6 weeks and 3 days pregnant … 3 days too late to get an abortion in that state. She reportedly traveled to Indiana for the procedure.

    How gutless but this is typical for these anti-choice Jihadists.

  6. pgl

    Before you declare Clarence and Virginia Thomas to be the top nut jobs ever – check this out:

    Kristina Karamo, the Donald Trump-endorsed Republican nominee for Michigan’s secretary of state, has made preposterous claims about abortion and demonic possession, according to clips from a 2020 podcast episode unearthed by CNN’s KFILE. “Abortion is really nothing new. The child sacrifice is a very satanic practice, and that’s precisely what abortion is. And we need to see it as such,” Karamo, a community college professor, said in an Oct. 2020 episode of her podcast. She also called abortion “the greatest crime of our nation’s history.” In another episode of the podcast, in Sept. 2020, she said that “demonic possession is real” and can be transmitted by “having intimate relationships with people who are demonically possessed or oppressed.” Karamo’s embrace of conspiracy theories ― including Trump’s lies about the 2020 election and false claims that left-wing anarchists were behind the Jan. 6, 2021, insurrection ― won her the former president’s endorsement last year. She calls herself a “proud Christian patriot” running for Michigan secretary of state to “fight to make sure that elections are decided by legal votes.”

    People who wear MAGA hats tend to be loony tunes – especially the ones from Michigan.

    1. macroduck

      Depressing, but not surprising. Where else do we find those businesses? Poor neighborhoods. Leeches be leeches.

    1. macroduck

      The initial rise in the index is often leading. Only serious head-fake was in 2005, a false positive. No false negatives.

    2. Rick Stryker

      Unfortunately the Chauvet model is not a very good guide to the probability of a recession in real time, i.e., identifying peaks before the NBER committee does. The model performs better at identifying troughs though. See this paper.

      There’s no magic bullet, data series, model or anything else that’s a consistent predictor. It’s all basically a judgment call.

      Plus, it’s necessary to act more quickly than real time anyway if your interest is in financial markets, since markets react almost instantaneously to news. The time to conclude that inflation was not transitory, the Fed was behind the curve, and that there would be a significant probability of recession this year was last year or early this year at the latest. Looking at current data as market watchers are wont to do won’t help you that much for that.

      1. pgl

        Chauvet, M., and Hamilton, J. (2006), “Dating Business Cycle Turning Points in Real Time,” in Nonlinear Time Series Analysis of Business Cycles, eds.
        C. Milas, P. Rothman, and D. Van Dijk, Amsterdam: Elsevier Science, pp. 1–54.

        Is that James Hamilton? Of course the better question is why are you relying on research from 15 years ago? Ever heard of the Great Recession?

      2. pgl

        A Comparison of the Real-Time Performance of Business Cycle Dating Methods Marcelle Chauvet and Jeremy Piger
        Journal of Business & Economic Statistics Vol. 26, No. 1 (Jan., 2008), pp. 42-49 (8 pages)

        Ah Rick – proper references might be nice. OK – this was published 14.5 years ago.

  7. Moses Herzog

    I like to share the visual graphics, especially if I think the data is semi-reliable:

    I warned about this, multiple times,.and was jeered on this blog. Strangely….. I remember 3-4 people “piling on” to tell me I was wrong, but don’t recall a single person taking my defense. They said “this has nothing to do with Ukraine or European gas supplies”. The people who jeered me for warning about sourcing of natural gas from Russia, claim to be experts in transitive price changes and even trade. Well I guess they told me, didn’t they??

    1. macroduck

      This is a worry. DGB is a bg deal, and not prone to Chicken Little stuff. Fahimi has deep staff resources to draw on, DGB and party. No likely she spoke off the cuff.

      German (European) industry cratering is also one of the current monsters under my bed, so I may he biased.

  8. pgl

    A Black man who was injured in an altercation with people who appeared to be part of a white nationalist group will speak out about the incident that happened in Boston. Dozens of people who appeared to be affiliated with Patriot Front, a designated hate group, marched through popular parts of the city on Saturday, including the Freedom Trail. Those people concealed their faces while wearing shirts that read: “Reclaim America.” People in that group were also carrying shields and flags.
    Boston City Councilor Ed Flynn said people who appear to be affiliated with Patriot Front, a white nationalist group, have showed up in the city at least a half dozen times over the last several months. “They tend to do kind of formal marches in major American cities at special events. We’re in the Fourth of July weekend. It is not surprising to me that they were in Boston,” said Thomas Lecaque, a history professor at Grand View University. Video also showed the group at the Back Bay MBTA Station, where its demonstration turned violent at one point. Boston police said they responded to the intersection of Dartmouth and Stuart streets at about 1:25 p.m., where a Black man told police that he was assaulted by members of the group after he asked them to stop and they pushed back. Police said that man suffered cuts to his head, eyebrow and one of his fingers. He was transported to Boston Medical Center to be treated.

    I heard there were 100 of these white nationalist domestic terrorists. A single black man who simply wanted a peaceful day v. 100 racists. I guess what these cowards consider a fair fight.

  9. Moses Herzog

    Mass shooting at Highland Park Illinois, 5 dead current count. It was a 4th of July parade. It’s on the extreme north side of Chicago.

    1. pgl

      6 dead. 24 wounded. Rifle recovered but suspect on the loose. They think it was white male age between 18 and 20.

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