Year-on-year, activity growth is still growing. Shown below are the Lewis-Mertens-Stock (NY Fed) WEI, and the Woloszko (OECD) Weekly Tracker, and the Baumeister-Leiva-Leon-Sims Weekly Economic Conditions Index for the US, for data up to a few days ago (September 17th):
Figure 1: Lewis-Mertens-Stock (NY Fed) Weekly Economic Index (blue), Woloszko (OECD) Weekly Tracker (tan), Baumeister-Leiva-Leon-Sims Weekly Economic Conditions Index for US plus 2% trend (green) Source: NY Fed via FRED, OECD, WECI, and author’s calculations.
The WEI took a dive from the previous week, down to 1.8% from 2.8%, while the Weekly Tracker continued to rise. It’s fair to say there some divergence, which is not surprising, given the large differences in methodologies. The WEI relies on correlations in ten series available at the weekly frequency (e.g., unemployment claims, fuel sales, retail sales). The Weekly Tracker is “big data” approach that uses Google Trends and machine learning to track GDP.
The WEI reading for the week ending 9/17 of 1.8 is interpretable as a y/y quarter growth of 1.8% if the 1.8% reading were to persist for an entire quarter. The OECD Weekly Tracker reading of 3.8 is interpretable as a y/y growth rate of 3.8% for year ending 9/17. The Baumeister et al. reading of 1.1% is interpreted as a 1.1% growth rate in excess of long term trend growth rate. Average growth of US GDP over the 2000-19 period is about 2%, so this implies a 3.1% growth rate for the year ending 9/17.
Since these are year-on-year growth rates, it’s possible we were in a recession in H1 as one observer suggested a month ago, but it (still) seems unlikely.