February | 2020 | RecessionAlert

Archive | February, 2020

Massive rebound in US housing market

By RecessionALERT on February 12, 2020 in Reflections

All 8 components of our comprehensive US Housing Market Index have posted solid and sustained gains in the last 6 months: Our detailed PDF report for Dec 2019 has been published to the REPORTS menu. According to many market watchers, there is no better barometer on the health of the U.S. economy than housing. It’s an industry that encompasses a myriad of vital sectors — banking, manufacturing, commodities, construction, durable goods, international trade, transportation and, of course, consumer spending. So […]

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Recession Probability Enhancements

By RecessionALERT on February 10, 2020 in Research Papers

The RecessionALERT USMLEI (US Monthly Leading Economic Index) is a 21-factor monthly leading index for the US economy. It is described in detail in this research note. Up until now, we had deployed a standard Probit statistical model to track implied recession probabilities of the USMLEI. Whilst the Probit models still provide a reasonable lead-time of recession warning, it faced the problem of only assessing the current level of the USMLEI and how often in the past this level was […]

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We found some worrying signs in labor data

By RecessionALERT on February 3, 2020 in Reflections

These days, its really hard to find worrying signs in US labor data. If one looks at the once famous Janet Yellen Labor Dashboard, apart from Job Openings, everything looks to be progressing fine, bar a small pullback here and there: Sure, the employment-to-population ratio (participation) has not come close to peak achieved in the last business cycle but everything else has.Even the equal-weighted 52-state US national average unemployment rate has been falling nicely to multi-decade lows. But dig a […]

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IMPORTANT DISCLAIMERS: Although many of our models rely heavily on back-testing, optimisation and probability methods, please note that past performance is NO GUARANTEE for future returns. No system devised by man can predict the future, let alone the future of the markets and economies. What we have are sets of mathematical models that use historical data and varying theories to pinpoint places in time when the STATISTICAL LIKELYHOOD of calling the start and end to recessions is the greatest. In the midst of all the best mathematical models, you can have geo-political events, wars, terrorist attacks, natural disasters and even nuclear accidents that tip everything upside down. This is always a risk factor you need to factor in on any recession call no matter how confident you are in a signal. The SuperIndexes are created through mathematical and statistical optimisation techniques that best fit the historical NBER data. There is no guarantee that out-of-sample performance will match that of prior in-sample performance.