Recession after the Election?

Charles Payne joins the recession camp.

Current indicators are not very supportive of an imminent recession:

Figure 1: Nonfarm Payroll (NFP) employment from CES (blue), implied NFP from preliminary benchmark (bold blue), civilian employment (orange), civilian employment adding number of workers indicating unemployed due to weather (orange square), industrial production (red), personal income excluding current transfers in Ch.2017$ (bold light green), manufacturing and trade sales in Ch.2017$ (black), consumption in Ch.2017$ (light blue), and monthly GDP in Ch.2017$ (pink), GDP (blue bars), all log normalized to 2021M11=0. Source: BLS via FRED, Federal Reserve, BEA 2024Q3 1st release, S&P Global Market Insights (nee Macroeconomic Advisers, IHS Markit) (11/1/2024 release), and author’s calculations.

Alternative indicators show a similar story. And the Sahm rule (real time) is now below the trigger rate:

Figure 2: Sahm rule (real time) indicator, % (blue). Trigger at 0.5 ppts. Source: FRED.

Nor is (my preferred – variation on Chinn-Ferrara (2024)) forecasting equation showing a recession soon, although a simple term spread model still signals warning (see discussion here).

Figure 3: Estimated 12 month ahead probabilities of recession, from probit regression on term spread and short rate, 1986-2024 (blue), on term spread, short rate and debt-service ratio (tan).  NBER defined peak-to-trough recession dates shaded gray. Source: Treasury via FRED, BIS, NBER, and author’s calculations.

 

 

6 thoughts on “Recession after the Election?

  1. Macroduck

    “In 1999, Payne settled with the SEC over a complaint alleging that on at least eight occasions, Wall Street Strategies recommended that its clients purchase members stock through recorded messages on its telephonic stock recommendation service. The complaint also alleged that Payne failed to disclose that he received payments from members to promote members stock. Without admitting or denying the alleged violations, Payne consented to the entry of a permanent injunction against violations of Section 17(b) of the Securities Act of 1933. In addition, Payne agreed to pay a civil penalty of $25,000.”
    — Wikipedia

    Payne is a shill. He had to leave the investment industry because of legal action against him, so now, he shills for faux news.

    There will be a recession after the election. There will be a meteor strike in Montana. There will be a Eurovision winner that is worth listening to. Just not right away.

  2. Macroduck

    Here’s Nate Silver on recent polling in Iowa, and implications for polling in general:

    https://www.natesilver.net/p/a-shocking-iowa-poll-means-somebody?publication_id=1198116&post_id=151088366&isFreemail=false&r=d0v&triedRedirect=true&__readwiseLocation=

    Couple of things:

    – Silver credits both Selzer and Siena with being high-quality pollsters, though they are miles apart in their recent Iowa results.

    – Silver implies, but doesn’t say outright, that many pollsters are jiggering their data in to tame outlier results POLL BY POLL. I have to think Silver has jumped the shark here, when it comes to polling for clients other than politicians. If clients demanded raw data – to which they have a right – that kind of duplicity could easily be caught. Silver has been in enough flame wars with polling specialists that we know he likes trash talking the other guys.

    Still worth a read for those curious about polling.

  3. David S

    I’m having trouble getting my timeline and facts straight on this Recession thing. According to some sources, the following was true, or will be true:
    -We were in a recession in 2016 that ended on Janurary 2017
    -The Biden Recession started in mid-2020 is ongoing
    -We had another recession in 2022 and 2023 (these are additive to the general Biden Recession)
    -We will have another recession if Kamala is elected (additive to the other recessions)
    -We will recover from the Biden Recession when Trump is elected

    Inflation is still running at 20% per quarter, immigrants have taken all of our jobs, Tariffs will only be paid by foreign companies, etc….

    Did I forget anything?

    1. Macroduck

      Elon says we’ll have a recession and a market crash if Trump puts him in charge of the budget. And that’ll be a good thing.

      1. Ithaqua

        “Purge all the rottenness out of the system.”… unfortunately for them, Elon and Trump *are* the rottenness that needs to be purged.

  4. baffling

    i have found payne to make some ridiculously stooopid comments on faux news in the past. i doubt anybody who listens to him has made any money in the market.

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