Monthly GDP and Coincident Index

The Brave-Butters-Kelley monthly GDP for June is out. Here’re growth rates of this series compared against the SPGMI (formerly IHS/Markit) monthly GDP, and the Philadelphia Fed’s coincident index, which should track GDP.

Figure 1: Month-on-month annualized growth rate of monthly GDP from SPGMI (blue), from Brave-Butters-Kelley (tan), and from Philadelphia Fed coincident index (green). Source: SPGMI (9/1), Indiana Univ via FRED (9/5), and Philadelphia Fed (8/25), and author’s calculations.

Informal discussion of BBK here.

The preceding are backwards looking indicators (for the monthly series followed by the NBER’s BCDC, see this 9/1 post). Even the Lewis-Mertens-Stock Weekly Economic Indicator for the week ending 8/26 at 1.96% is backwards looking.

The July BBK leading indicator is in the positive range, at 1.2. Thatb means real GDP growth is expected to be 1.2 standard deviations above trend. This is contrast to Conference Board July LEI (a combination of financial and real and expectations indicators) which declined in July, and has been signalling recession for months.

31 thoughts on “Monthly GDP and Coincident Index

  1. Moses Herzog

    I wager you noticed Menzie that GS has lowered inflation expectations down to 15%. Worthy of note. I can’t get my hands/eyeballs on the GS Market notes, but my first question to them would be, are they assuming no more rate rises??

    1. Moses Herzog

      Are you talking about Kerch Bridge?? If so, you are severely sick in the head. It will be taken down.

      Not a question of “if”, but when.

  2. Macroduck

    The Conference Board’s leading index is heavily weighted toward manufacturing, with five of its ten components drawn from the factory sector. As has been widely noted, the factory sector is not doing nearly as well as the services sector. That’s one big reason the LEI is signalrecession.

    The factory sector is heavily represented because it has tended to lead the rest of the economy, but economies change and what led in the past may not lead any more. If you look at the NBER’s list of recession determinants (arguably concurrent, not leading) there is far less focus on factories.

    In addition, the slope of the yield curve (funds/tens) is also among the components of the LEI and has been signaling recession for just about a year now. If we aren’t in recession right about now (GDPNow estimate currently 5.6% SAAR, by the way), then the yield curve is throwing a curve ball (sorry).

    So the LEI could prove correct, but there is good reason for doubt.

    1. pgl

      “X owner Elon Musk is threatening to sue the Anti-Defamation League for defamation, claiming that the nonprofit organization’s statements about rising hate speech on the social media platform have torpedoed X’s advertising revenue.”

      Like how does run a business without spreading hate?

    2. Moses Herzog

      @ Macroduck
      One part of me wants to chuckle and one part of me wants to groan. Arguably the most intelligent and talented race on planet Earth (I can say this unbiased as I am somewhat sadly 100% Goy) always handy to be the punching bag. And yet some Israelis gravitate towards the Orange Abomination for the metaphorical equivalent political actions towards the Holy Land of tossing paper towels to hurricane victims in the Caribbean Sea. Who knew such a cerebral people could be so easily led around by the nose by an adult-aged infant from Queens??

      What a strange bunch of humans we are.

  3. pgl

    I think we have figured out what CoRev has been up to!

    US ‘university’ spreads climate lies and receives millions from rightwing donors

    A rightwing media outlet promoting climate-change denialism and other “anti-woke” staples to young students and adults via social media has become a fundraising Goliath, raking in close to $200m from 2018 to 2022 with big checks from top conservative donors, tax records reveal.

    Founded in 2009 by the conservative talkshow host Dennis Prager, the eponymous Prager University Foundation is not an accredited education organization. But via online media its PragerU Kids division has become a key tool in spreading false claims to young people with short videos aimed at undercutting widely accepted science that climate crisis disasters are accelerating due, largely, to fossil-fuel usage.

    1. Moses Herzog

      Do we know when Stephen Moore and Kevin Hassett are joining the Prager board?? Navarro will be in jail and Herman Cain has passed away after meeting a wayward girl with Covid at the curb of a Tulsa hotel.

  4. David O'Rear

    Off Topic:
    US imports from China fell 22.5% in July, from a year earlier, the 10th straight decline.
    Exports to China were down 13.9%, the third consecutive fall.
    Merchandise trade between the two economies is now at its lowest point in nearly four years.

    1. Macroduck

      The imports side of things seems to line up pretty well with the post-Covid surge and then flattening out U.S. goods consumption:

      U.S. exports to China have been quite lumpy the past few months, but also seem to line up with China’s slowdown.

      There is a strong temptation to associate trade patterns with foreign policy squabbles, but I’m not sure we can objectively do that, based on totals. A closer look at goods categories would be more convincing.

    2. Macroduck

      China’s August export data are out. The data aren’t seasonally adjusted, but it looks like the drop in exports has stalled.

  5. Macroduck

    In comments here, one particularly badly informed (or informed-by-bad-intention) commenter insists that economics, or mainstream economics (which he defines variously as whatever he has noticed in a major daily newspaper, whatever he thinks Krugman said, or just “whatever”), is a scheme to comfort the rich and disenfranchise everyone else. That’s jabbering nonsense, of course, but when thar commenter says there’s a “narrative”, he seems to think he’s absolved from any attention to facts.

    Let’s turn the the microphone over to someone who actually knows a lot about reality. As an economic historian, Brad DeLong also knows a lot about the history of the study of economics. Here is a view of his which he has repeated a number of times, presumably because he thinks it’s important:

    The upshot is that there is a movement within economics, often associated with the University of Chicago since maybe 1955 or 1960, which has disavowed much of what U. Chicago economics had till then stood for, and which much of the rest of the profession still stands for, on a good day.

    DeLong story gives the lie to what our “Ukraine deserved to be invaded” troll has to say about economics. Worth a read just for the eye-opening application of math to thinking about normative economics.

  6. Moses Herzog

    I’m a bit of a daydreamer time to time. Sometimes this works to my favor, other times not. But I can’t help but be curious, how much Menzie treasures this moment (it’s starting to appear like a pattern of practice) of Xi Jinping’s apparent cluelessness on Macroeconomics. Why would Menzie “treasure” this?? Because it’s going to give hive lots of general material /case studies to observe as a social scientist, but more specifically some interesting things to watch on how internal things in China are handled in relation to exchange rates and the currency value of the RMB.

  7. Moses Herzog

    *going to give him.

    Don’t ask me how him turned into “hive”. But I don’t think I can blame it on spell checker because I’m pretty damn sure I turned it off. But then I have to reset the “brightness” setting lower every time I turn this confounded machine on, so…..

    1. Moses Herzog

      It’s enough to make you wonder who is more clueless on Macroeconomics, donald trump or Xi Jinping?? Doesn’t say much for their voting block’s knowledge base either does it?? Like American farmers who would rather go begging to the USDA for MAGA social welfare than make money from their crop production.

      CoRev, Bruce Hall, and Rick Stryker love to see American farmers (mostly white males) begging for lunch money from the U.S. government, who knew??

  8. pgl

    Jonny boy has been a lot of chirping about how the ultra rich got more of the increase in real GDI over the last year than the rest of us. He cites a source he does not understand about factor incomes, which he has no clue what they are.

    But BEA’s NIPA Table 1.10. ‘Gross Domestic Income by Type of Income’ reports income by the factors of production. Let’s consider two things starting with Line 2: Compensation of employees:

    Nominal compensation in 2022QII was $25,517.8 billion and was $26,300.2 a year later. This 3.07% nominal increase has to be weighed against the 3.58% increase in the GDP deflator. So yea – real compensation fell slight.

    Now consider Line 15: Corporate profits which were $2,538.9 billion as of 2022QII and only $2,328.3 billion a year later. A nominal decrease = 8.29% and a real decrease = 11.46%.

    Now no one should be crying for the ultra rich but it does seem that if they capture most of these profits, the last year has not be a rosy for them as little Jonny boy keeps claiming. Then again little Jonny boy has shown us over and over he has no clue what any of this data even means.

  9. Moses Herzog

    It really isn’t possible is it?? It almost gives one the idea 2021–2023 inflation could be caused by many other reasons than increased wages for the working class. But don’t ask Isabella Weber. Orthodox economists (Larry Summers, and the cool kids) tell us Weber has no permission to discuss the matter from the gray hairs or balding men with all the answers.

    The “good news” is, if we proffer up words like “immaculate”…… orthodox economists don’t have to give the Webers of the world any credit for having their finger on the pulse of reality. Orthodox economists prefer to shrug their shoulders and say “Well I wasn’t right in my claim, so I guess nobody knows the reason. Rather than give credence to those with theories much closer to reality (Weber et al) than mine, I checked the ceiling tiles in my campus office, and all the tiles say this disinflation is “immaculate”, so our self=proclaimed “riddle” is now over.”

  10. pgl

    Is Kevin Drum noting the WSJ has hired Bruce Hall?

    Just stop it: Health insurance costs are rising moderately *if you adjust for inflation*
    AuthorKevin DrumPublished onSeptember 7, 2023 – 8:33 am17 Commentson Just stop it: Health insurance costs are rising moderately *if you adjust for inflation*

    The Wall Street Journal has alarming news:

    ‘Health-insurance costs are climbing at the steepest rate in years, walloping businesses and their workers. Costs for employer coverage are expected to surge around 6.5% for 2024, according to major benefits consulting firms Mercer and Willis Towers Watson, which provided their survey results exclusively to The Wall Street Journal.’

    I have trained you all well enough to know what’s coming next, right? Here’s the chart from the Journal article, but this time adjusted for inflation:

    1. Moses Herzog

      It was around 8.2 seemingly forever while I was there, you can see from the graph. The change in the urban sprawl and density and speed of construction was unbelievable at that time, and a lot of that turned into empty office space. Much of the construction was predetermined to be empty really before they had even finished it. I had teacher colleagues who were investing in high rise residential apartments the mania was so nuts. I would walk by very tall buildings that were like ghost towns in the middle of a city (I don’t think that counted suburbs) of 3.5 million people.

    2. Moses Herzog

      It kind of affected me slightly when I would walk around the city. Here is a nation, which at least at that time had the reputation (a good part of it deserved) that they could not assemble a door knob or the flush lever on a toilet properly, while you are walking very near to and directly under construction cranes. It didn’t take too much imagination to imagine a mishap witha crane dozens of floors above you, wind or no wind on whatever day.

  11. joseph

    Lock him up!

    Peter Navarro convicted on two counts of contempt of Congress. Sentencing comes in January.

    Nararro is professor emeritus at Irvine. Do you think they will take him back? He could teach classes on how tariffs are paid by China.

    Recall that Jared Kushner found Navarro by browsing Amazon for books on China and came across Navarro’s “Death by China” and told Trump, “he’s our guy.”

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