With July in, it’s interesting to note that elevated probabilities of recession in 12 months come not from spreads, nor financial conditions, but oil prices.
A Peak in 2021 Q4? Business Cycle Indicators at the Beginning of August
If one took GDP as the determinant of NBER determined business cycles, this is what the picture would look like (normalizing on mid-Q4):
Nowcasts, August 1
From Atlanta Fed and IHS Markit:
The Ratio of GDI to GDP
Is at record highs (at least back to 1947, using latest available data).
The Geographic Distribution of Economic Activity, through June 2022
From the Philadelpha Fed, coincident index 3 month growth rates, through June 2022:
In These Times: Advance to 3rd GDP Growth Rates
The quarter-on-quarter growth rate for Q2 at 0.9% was below consensus by 1.3 ppts (SAAR), but above GDPNow and IHS-Markit (0.4 ppts, 0.5 ppts respectively). While the mean revision for advance to third release is essentially zero over the 1996-2020 period (see BEA), over the last 5 quarters (2021Q1-22Q1), they have been 1.9 ppts (MAR 12.9 ppts, RMSR 6.8 ppts). That is, the characteristics of revisions from advance to 3rd seem to have changed (although I’ve not done a test for statistical significance), with the advance being revised upward over releases.
Additional Perspective on the GDP Release
Here are some some observations to complement Jim’s post on the GDP release .
Is this a recession?
The Bureau of Economic Analysis announced today that seasonally adjusted U.S. real GDP fell at a 0.9% annual rate in the first quarter. That makes two quarters in a row of falling real GDP, which is one rule of thumb for declaring the economy to be in a recession. The current economic weakness could certainly develop into a recession. But the evidence isn’t convincing that a recession is already under way.
Continue reading
Business Cycle Indicators as of July 27th
Here are some key indicators followed by the NBER Business Cycle Dating Committee. I’ve added civilian employment to the set of indicators. Below are the trends over the recession and recovery to date, with some guesses for June consumption, May & June sales (since numbers are released on 7/29) and July employment (released on 8/5).
What Pushed Nowcasts Up?
Following up on the previous nowcast post, there are two items of relevance: (1) trade balance (for May); (2) manufacturing orders. Here’s trade balance (release):