Business Cycle Indicators at Mid-May

With the industrial production release showing an upside surprise (0.5% m/m vs -0.1 consensus) due to an outsized manufacturing increase (1% vs. 0.1% consensus), this is the picture of the series the NBER Business Cycle Dating Committee (BCDC), plus monthly GDP from S&P Global Market Intelligence (SPGMI) formerly Macroeconomic Advisers.

Figure 1: Nonfarm payroll employment, NFP (dark blue), Bloomberg consensus of 5/16 (blue +), civilian employment (orange), 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), GDP (blue bars), all log normalized to 2021M11=0. Bloomberg consensus level calculated by adding forecasted change to previous unrevised level of employment available at time of forecast. Source: BLS, Federal Reserve, BEA 2023Q1 advance release via FRED, S&P Global/IHS Markit (nee Macroeconomic Advisers, IHS Markit) (5/1/2023 release), and author’s calculations.

It’s interesting to consider the evolution of two other indicators of the broad state of the economy: GDP+ and the Philadelphia Fed’s coincident index for the US.

Figure 2: GDP+, scaled to 2019Q4, in bn.Ch.2012$ SAAR (blue bars, left log scale), and coincident index (blue, right log scale). Lilac shading denotes a putative 2022H1 recession. Source: Philadelphia Fed and Philadelphia Fed.

Interestingly, GDP+ and the coincident index (the latter based mostly on labor market indicators) did not indicate a recession in 2022H1.


28 thoughts on “Business Cycle Indicators at Mid-May

  1. New Deal democrat

    It’s true that industrial production increased 0.5% in April, but only in contrast to March being revised downward -0.5%. Meanwhile total business sales were revised downward in January and February, and declined -1.1% in March, which means it is almost certain that real final sales will be down again significantly in March. And real retail sales – about 1/3rd of real final sales – were unchanged in April at a level near their two year lows. So those two indicators used by the NBER May very well have made their peaks.

    If this year’s debt debacle proceeds like 2011, in the next short term almost all data will head down. In 2011 it was not until several months after the debacle that the data meaningfully recovered.

    1. Macroduck

      Real PCE ended Q1 below the quarter average, making the Q2/Q1 growth comparison a little tougher. We still have the roughly 62% of PCE from services that can make up for PCE goods weakness that is suggested by retail sales. GDPNow cut its real PCE growth estimate to 1.6% (SAAR) from 1.8% in response to the retail sales data.

      1. AS

        Have you looked lately at Advance Real Retail and Food Service Sales, FRED series, RRSFS?
        For the month of April 2023, the RRSFS Y/Y percent change is (3.2%). Also, for April 2023, the monthly compound annualized change is only 0.6%. Using a default bandwidth of 1.6, the nonparametric regression estimate for April is (3.0%) for the monthly annualized data using the past 12 months of data. Eight of the past 12 months have shown significantly negative annualized percentages.

        Y/Y % Change

        Month Annualized

    1. Macroduck

      Your point about increasing gun deaths in Texas is correct; there has been a sharp increase:

      Texas is right about halfway up the list among states in gun deaths per capita:

      That was as of 2021, so the recent increase may boost Texas in the rankings, and being average isn’t something to brag about in this case. By the way, notice the geographic and political distribution of gun deaths per capita in the CDC data.

      There is a positive correlation between gun deaths and state legal culture which is tolerant of carrying guns:

      While gun ownership and gun homicide rates are not strongly correlated, I’ve seen research (which I can’t find right now) showing that a combination of gun ownership and social trust (trust of strangers, trust of neighbors) does a good job of predicting gun homicide. Here’s a single-city study which makes a similar case, but it’s not the one I’m looking for.

      Anyhow, fragmentation of society, racism, division – the whole John Birch/GOP thing – increases gun homicides when guns are widely available.

      I’ll keep looking.

    1. Macroduck

      Haley is right, in a sick way. Serious racists went wild when Obama was president, and moderate racists shifted toward greater racism when they saw they had fellow travelers. Trump capitalized on that racism, bringing it further into the open.

      Blaming Obama amounts to blaming the electorate for choosing a black guy to run the government, but that won’t do, because it has to be Obama, not voters, who Haley blames.

      1. pgl

        Yea the Klan did go crazy but anything that comes out of Nikki Haley’s mouth is repugnant. After all – she did Trump’s bidding.


        It’s way more complicated than that. Obama had little in terms of race until 2014. Your creating a straw man. Also note the Romney Trump overlap except for independent voters. Race was irrelevant.

        If Democrats aren’t going to bring up these people…….Trump,Fuentes,Gosar,Musk…..ethnic background, that is their fault. Tell the story of Lukudist kosher nationalism macro.

      3. Moses Herzog

        @ Maroduck
        Very well stated. Becuaue you’re white, you almost made me feel proud I’m white. Can I say that?? (joke)

        Uuuhm, I remember another semi-truck driver when I was driving semi who used to tell a joke, If someone was very courteous, ambitious, and polite or did something at an excellent level. he used to say “That’s mighty white of you”. I think he “bought in” to that style of thinking, but I have to shamefully confess, we both kinda got our giggles off on the semi-racist expression.

  2. pgl

    We all knew Rudy Giuliani was one disgusting POS but DAMN!

    NEW YORK — Former New York City Mayor Rudolph Giuliani has been named in a bombshell sexual harassment suit by Noelle Dunphy, charging him with demanding sexual favors, and engaging in alcohol-fueled rages and wage theft. The suit is from a woman Giuliani hired to handle business development for his firm. It is filled with multiple allegations about an influential politician who reportedly demanded sexual favors. “He was constantly pressuring her, making sexual comments, sexual remarks, to her, about her, about himself. When they were supposed to be working he would, as our client alleges, he would then grope her and try to initiate sexual contact,” attorney Justin Kelton said.

    All that and he did not pay here? What’s the matter Rudy. I thought you got $2 million per Trump pardon.

  3. joseph

    Jon Schwartz notes: “It’s impressive that Elon Musk has managed to become both the Henry Ford and Wernher von Braun of our times.”

    By which he means, all Nazi sympathizers.

  4. JohnH

    Peter Coy: “ What Americans Don’t Understand About China…

    It sometimes comes as a surprise to Europeans and Americans that Chinese people who have seen and enjoyed the best of the West nevertheless prefer China. What about the lack of democracy and the repression of minorities such as the Uighurs and Tibetans? The pollution? The threats against Taiwan and incursions in the South China Sea?

    Keys Jin doesn’t ignore China’s faults and failings in “The New China Playbook: Beyond Socialism and Capitalism,” which was published on Tuesday. But she tells a nuanced story that deserves attention at a time of extreme tension between China and the United States.“

    Good to see perspective from outside the Overton Window…

  5. JohnH

    More news from outside the Overton Window–“Poland suggests Zelenskyy resign; Ukraine prez losing support of European neighbours,

    A group of European countries led by Poland has been quietly urging Ukrainian President Volodymyr Zelenskyy to find a way to end its war against Russia. These nations are allies of Kyiv and “declared enemies” of Russian President Vladimir Putin, according to US investigative journalist Seymour Hersh.

    “…Poland, Hungary, Lithuania, Estonia, Czechoslovakia, and Latvia. These countries are all allies of Ukraine and declared enemies of Vladimir Putin,”’ Hersh wrote on his website (which is behind a paywall.)

    Maybe the end of this pointless, futile, and exorbitantly expensive proxy war is finally coming into sight.

    You can find Hersh’s piece reported by news outlets around the world…but I didn’t find any mainstream Western outlets that mentioned it.
    It’s as if non-conforming information is being expunged from the media in advance….which is why Hersh self publishes at Substack.

    1. Menzie Chinn Post author

      JohnH: Couldn’t the war be ended by the Russians simply removing their troops (they’re not just Russian proxies in Ukraine now) from Ukraine as defined by UN agreed borders.

        1. Menzie Chinn Post author

          JohnH: I don’t know if “Russia” would “feel” safer, but if Russian forces were not blowing up and killing civilians, they likelihood of Ukrainian weapons killing Russians, and hitting targets in Russia, would be lower.

          1. JohnH

            “they likelihood of Ukrainian weapons killing Russians, and hitting targets in Russia, would be lower.” Probably true.

            And what if Russia thought that NATO was likely to install military bases all along the Russia-Ukrainian border, do you think that Russia would feel safer after withdrawing its troops?

        2. Noneconomist

          Other than you, JH, who’s concerned with Russia’s safety IN UKRAINE? Given the severity of their losses, they would appear to be much safer out of Ukraine than in it.
          Your myopia is reaching new lows. Like the fallen star Seymour Hersh, your concern for Russia—and your clear desire to wallow in western anti Russian conspiracies—is clearly noted.
          Hersh is now 86 and given his recent dives into near paranoia and eagerly accepting any Russian propaganda is on the obvious downside of his career.
          Other than your career never having an upside, what’s your excuse?

          1. pgl

            Jonny boy has this delusional that the mighty Estonia army is about to storm Moscow. Yea – he flunked basic geography too.

          2. JohnH

            I guess non-economist would have been happy to have Soviet nukes in Cuba? Why would anyone have felt threatened by that?

          1. Noneconomist

            In JohnH World, Russian troops continue to suffer significant casualties while attempting to inflict same on Ukrainian soldiers and civilians. Returning home might make them feel unsafe!
            CoRev seemed to have Fool of the Year honors locked up, but by golly, JH is making a run for the title.

  6. AS

    Professor Chinn,
    I think I finally managed to calculate instantaneous inflation using Excel. Hopefully not far off topic.
    I found instantaneous inflation at 1.917% or 2.0% rounded for December 2022 agreeing with the article, using data available at the time of the Eeckhout article. Using the latest revised data, I find instantaneous inflation for CPI All as follows using updated data from FRED. Am I close?
    Dec 2022: 3.3%
    Jan. 2023: 4.3%
    Feb. 2023: 4.3%
    Mar. 2023: 3.1%
    Apr.2023: 3.5%

    1. AS

      While working with the instantaneous inflation, I got introduced to Nadaraya-Watson non parametric regression using the Epanechnikov Kernnel. After much struggle, I used Excel to compute the resultant values for CPI-All for the past twelve months using annualized data and a bandwidth of 1.6, which is the Silverman value based upon sample size 12, SD of sample =2.5 and dimension =1.
      Comparing five months of output for Instantaneous CPI All Inflation with Nadaraya Watson method, the Instantaneous CPI values look very close to the Nadaraya-Watson values. Difficult for a hobbyist to know which method is better. The April Nadaraya-Watson value looks a bit more optimistic than the Instantaneous value.

      Dec. 2022: 3.3%
      Jan. 2023: 4.3%
      Feb. 2023: 4.3%
      Mar. 2023: 3.1%
      Apr. 2023: 3.5%

      Dec. 2022: 3.2%
      Jan. 2023: 4.6%
      Feb. 2023: 4.0%
      Mar. 2023: 2.8%
      Apr. 2023: 3.0%

  7. JohnH

    After the killing of wedding parties and funeral processions in Afghanistan that O’bomber targeted, which pgl never criticized, he discoversn his humanitarian mask and puts it on to criticize Russia!

    I agree that the casualties in Ukraine are horrendous. Negotiations for a durable peace are long past due.

    When talking about the US’ humanitarian behavior, pgl might consider putting this into the record: “THE U.S. STILL OWES MONEY TO FAMILY OF 10 AFGHANS IT KILLED IN “HORRIBLE MISTAKE”…Some survivors of the 2021 drone strike are struggling in California as they wait for the U.S. to make good on a promised condolence payment.

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