That’s the title of an article reprinted at the Heritage.com, by current BLS Commissioner-nominee EJ Antoni,
…an increasing number of indicators say the recession has arrived in the broader economy.
Typically, the economy grows as population and productivity increase, expanding total production, income and consumption. When that growth stagnates and reverses into contraction, we call it a recession. Production declines, and people have a lower quality of life.
The most common measure for growth or contraction in the economy is gross domestic product (GDP), which estimates total spending. It’s imperfect, like any estimate, but those imperfections are becoming highly problematic today.
The article was posted on August 22, 2024. For reference, here is the latest available data, including GDP.
Figure 1: Nonfarm Payroll from CES (bold blue), civilian employment with smoothed population controls (orange), industrial production (red), Bloomberg consensus industrial production of 8/14, (red square), 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 2025Q2 second release, S&P Global Market Insights (nee Macroeconomic Advisers, IHS Markit) (9/2/2025 release), and author’s calculations.
Note that while industrial production was below recent peak as of August 2024, all other indicators continued to rise, including GDP. Now, these are the most recent-vintage numbers. To be fair, we should examine the numbers EJ Antoni had in real time. As it happens, I recorded these series at the time Dr. Antoni made his statement, in this August 2024 post.
Figure 2: Nonfarm Payroll (NFP) employment from CES (blue), NFP implied preliminary benchmark revision (bold blue), civilian employment (orange), implied civilian employment using CBO estimates of immigration (bold orange), industrial production (red), personal income excluding current transfers in Ch.2017$ (bold 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 2024Q2 advance release, S&P Global Market Insights (nee Macroeconomic Advisers, IHS Markit) (8/1/2024 release), and author’s calculations.
Note as of end-August 2024, most series followed by the NBER Business Cycle Dating Committee (BCDC) were still rising. While industrial production was declining, industrial output only comprises 17% of US GDP. On the other hand, as of end-August vintages, nonfarm payroll employment (even after preliminary benchmark downward revision!) and personal income excluding current transfers — the two key variables emphasized by the NBER BCDC — were rising! (Official civilian employment was flat, but if Dr. Antoni had been aware of the concerns regarding the population controls used by the BLS, then he would’ve noted the downweighting that should have been ascribed to this variable; sadly, he other was unaware, or chose not to mention, casting doubt on his reliability as an analyst of economic data).
you yanks should be so thankful you have the recession whisperer living there.
Russians invade Polish airspace. So Trump issues an ultimatum …
to NATO.
Way-the-heck off topic and pretty obscure, but I think we may get a “surprise” from the FOMC that isn’t meant to be a surprise.
The FOMC meets next week, and is widely expected to cut the funds rate target band by 25 basis points. What is not widely anticipated, at least in the financial press, is adjustment to the reduction of the Fed’s balance sheet; I’m wondering whether we might get hints.
The Fed’s official policy is to provide “abundant reserves”, which in practice means reserves large enough to absorb shifts in financial market activity without allowing the funds rate – or related interest rates – to deviate from target.
A quick tour of Fed research shows that staff have been studying the heck out of this issue. They know that the run-off of assets is nearing the point at which reserves will no longer be “abundant” by the Fed’s definition.
As an aside, the Treasury’s general account (TGA) with the Fed is among the largest swings in demand for reserves. The Fed typically uses reverse repos to provide the liquidity offset to swings in the TGS.
Here’s reverse repurchase agreement volume:
https://fred.stlouisfed.org/series/RRPONTSYD/
Notice the recent very low volume. That has drawn some attention from market participants. I’m gonna guess that a drop in money fund transactions with the Fed have something to do with this:
https://fred.stlouisfed.org/graph/?g=1Mivu
But I digress. My point is that the Fed is risking a liquidity strain as it continues to run down its asset holdings, and that Fed officials are fully aware of this. They are also aware that they had to cough up half a trillion dollars in liquidity in 2019 because of a miscalculation, and that year-end 2024 gave evidence that “abundant reserves” were not so abundant. If the Fed wants to avoid a bigger hiccup at year-end 2025, it’s time to get busy.
Suffice it to say that the Fed is aware that running down its asset holdings is reaching (has reached) the point at which greater care is needed to avoid liquidity problems.
What happens if the Fed does adjust course on reserve holdings? Among other things, maybe a misinterpretation. Though Fed staff have published and published about the need to stabilize the Fed’s asset portfolio in order to maintain abundant reserves, the general public, politicians and – as far as I can tell – market participants haven’t absorbed what staff research suggests. So we could have a “surprise” that isn’t meant to be a surprise. And we could have a felon-in-chief who claims credit for bullying the Fed into doing something the Fed was going to do anyway. Bad for Fed credibility. Bad for asset pricing if market participants don’t understand Fed policy thinking.
Presumably you are talking about something different from this? It certainly doesn’t look like banks are running out of reserves, especially compared to pre-Recession days.
https://fred.stlouisfed.org/series/TOTRESNS