NBER Business Cycle Dating Committee key indicators. Consumption (preliminary) falls markedly.
Figure 1: Nonfarm Payroll incl benchmark revision employment from CES (bold blue), implied NFP from preliminary benchmark through December (blue), civilian employment as reported (orange), 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 2024Q4 advance release, S&P Global Market Insights (nee Macroeconomic Advisers, IHS Markit) (2/3/2025 release), and author’s calculations.
GDPNow drops precipitously, to -1.4% q/q annualized.
Figure 2: GDP (bold black), Survey of Professional Forecasters February survey (teal), GDPNow of 2/28 (blue square), NY Fed nowcast of 2/28 (red triangle). Source: BEA, Philadelphia Fed, Atlanta Fed, NY Fed, and author’s calculations.
Off a cliff refers to this picture:
Figure 3: Retail sales deflated by chained CPI (blue), real consumption (tan), real manufacturing and trade industries sales (green), all month-on-month growth rates annualized (using log differences). Source: BEA, Census, St. Louis Fed via FRED, and author’s calculations.
True, but very similar sharp increases in real income and sharp decrease in real spending happened last January, suggesting an unresolved seasonality issue.
On the other hand, the Business Dynamics Model for Q2 of last year indicated an outright decline of over 100,000 jobs (SA) for the quarter. And the QCEW for Q3 of last year indicates only a 0.8% YoY gain in employment, suggesting about 500,000 fewer jobs gained during that 12 month period than even the recent downward revisions indicated.
Which strongly suggests the economy was significantly weaker on Election Day than we thought at the time.
Okay, today we have genius Elon Musk saying: “A more accurate measurement of GDP would exclude government spending.”
So GDP = C + G + I + NX is no longer valid. I guess that makes sense to an ideologue who thinks that anything that government does or spends money on is by definition non-productive. It would explain his delight in taking a chainsaw to everything he doesn’t understand in government.
Apparently his conspiracy drenched mind doesn’t know that the BEA publishes GDP every quarter and includes a breakout if each component, including government spending, so its not like they are hiding anything.
It is shocking that someone so profoundly ignorant is in charge of the economy. And Republicans in congress are eating it up. What stupid people think a smart person sounds like.