Personal Incomes, less Transfer Payments and deflated by Personal Consumption Expenditures, is used as one of the four co-incident components of the NBER Recession Model. There was a huge jump in this indicator for the months of November and December 2012 quite possibly as a result of incomes being pulled forward as a result of the Fiscal Cliff taxes uncertainty. According to the BEA, “Personal income in November and December was boosted by accelerated and special dividend payments to persons and by […]
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Coincident data not playing nice with the bears
Over the last two months we had Real Retail Sales, Industrial Production, Personal Incomes and Non-Farm payrolls all pushing new expansion highs. The only data not in for December now is Real Incomes. In addition we have noted upward revisions as opposed to the downward revisions promised by the recession-is-here camp. With neither leading nor co-incident data to lean on in support of a recession call, options are getting slim in defense of a recession that is supposedly in its […]
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Launch of new Recession Analytics Tool
We are pleased to announce the revamp of our historical time-series data file, which is published quarterly, with the following new additions: Addition of Labor Market Index historical data Addition of Long Leading Index historical data Addition of RAVI historical data for 1/2/3/5/10 year forecasts New analytic tool & charting visualisations RFE+ which is index showing number of 12 models flagging recession The first two items are self-explanatory and you can read about them and look at their sample reports on the […]
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100% Recession risks – a follow on
Professor Piger updated his recession probability model that caused so much attention early November (See “Debunking 100% probability of recession“). As we forecast last month, the probability index undertook a “revision” of epic proportions as displayed below (01-Dec-12 vintage): This is a classic real-world rendition as to why you cannot make “never before has recession probability reached 20% without a recession ensuing shortly after ” type inferences with these Markov model readings, and why the developers of the model use […]
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On the cliff’s edge
Industrial Production was slowed by hurricane Sandy and its growth rate is now in recession territory. Bear in mind, for our “NBER Recession Model of last resort” we use a much faster smoothed growth here than the standard 12-month rate of change and therefore many other studies you observe on Industrial production may not be in recession territory yet. We have found the faster growth rate window deployed by our model to work the best for our composite model though. A recession signal from Industrial production […]
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Debunking 100% probabilities of recession calls
The latest buzz on the internet is a FRED chart published by the Federal Reserve of St. Louis of Chauvet and Piger’s dynamic factor Markov recession probability index. Its currently jumped from less than 1% to 18%. Inferences are being made that recessions have always been underway or occurred very shortly after a reading of 18%. Suddenly the 18% probability went to 100% based on this inference. Why this inference is so ludicrous is also aptly described on Jeff Millers’ […]
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On the brink of Global Recession
The Global Economy is on the brink of a recession with 58% of 29 OECD countries experiencing business cycle contractions. The chart below shows OECD defined global contractions (grey shaded areas) together with the percentage of 29 OECD member countries experiencing slowdowns. It is evident that whenever 50% or more of countries enter contraction (red dotted line) that the odds of global recession are very high. The blue lines show NBER recessions for the U.S and we see that whilst […]
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Retail sales data not supportive of recession
The September RETAIL SALES component (RSAFS) of the NBER Recession Model was in today. It surprised to the upside as well as had an upward revision on the prior month. For the most part, this series has been revised downwards over time of late, but this does not necessarily equate to downward revisions to the real-time observed 12-month growth rates. This is shown below where we compare the growth rate of a series that only looks at real-time published data […]
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50 State Co-incident update : No Recession
A while back we published an interesting project (Predicting US Recessions with State co-incident data) to see if we could get some advance recession warning from the co-incident indices of the 50 US states. We built a composite economic index of 50 U.S states as published by the Philadelphia Federal Reserve, combined in a positively-weighted index (CEI) that is statistically regressed with NBER & 3-months prior dates (hence the “leading” characteristics of the composite.) It aims to give 3 months […]
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CFNAI- revisions and recessions
The latest CFNAI-MA3 reading came in at -0.47 from last weeks -0.26 (revised down from -0.21). This downward jump (and downward revision) naturally has everyone on edge. We are not yet concerned with this reading as it is not being corroborated by any leading indicators. However with the perma-bears now being forced to hang their hats onto the “revisions” coat-hook recently, this reading appears uncomfortably close to the -0.7 recession trigger for those spooked by the perma-bears’ gloomy predictions. We looked […]
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Judging Recession Forecasting Accuracy
In August 2011, ECRI declared a recession was upon us. If you spend enough time examining their initial proclamations it was literally that a recession was imminent, saying “It’s either just begun, or it’s right in front of us.” Subsequently they revised their call, saying the recession would hit “by mid year” 2012. At that time an array of proprietary leading indicators were in contagion. Hussman and others followed suit with bearish outlooks. In January 2012 we said we couldn’t see it. The general response from the […]
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Here we go again…
WE DON’T SEE IMMINENT RECESSION & NEITHER SHOULD THE NBER We find ourselves in the 3rd “summer slowdown scare”, just like 2010 and in August 2011. During this time the perma-bears crank up the alarm bells and we are bombarded with a cacophony of ill tidings that spell the doom of the U.S economy. As we saw in 2010 and 2011 the economic slowdowns turned out to be “soft landings”. Investors scared into the side-lines stared in disbelief as the […]
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On standby for a Great Trough
13 June 2012 UPDATE: This Great Trough is not done yet, we may well re-test prior lows in the bottom-making process. The breadth- index head-faked and fell below 26% yesterday meaning the countdown timer will be reset. We now await for the index to rise above 26 again and attempt a second strike through 87 within 15 trading days. We then issue the BUY signal. For a detailed background, mechanics and statistics of this system read The Great Trough Detector Project on our RESEARCH […]
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Can the U.S skirt global recession?
With many parts of the Euro-zone entering or already in recession, and the OECD recently putting Australia, Germany and Italy into recession, one has to wonder if the feeble U.S recovery can skirt a global recession. Many mainstream pundits have been pointing to countries around the globe slipping into recession as a reason why a U.S recession in the near future is a done deal. But this is not necessarily the case. The chart below shows which percentage of the 39 OECD countries across the world have their […]
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ECRI WLI Growth Conundrum
More recently, ECRI has switched from the use of smoothed 6-month growth rates (as calculated by their WLIg growth metric) to annual (52-week) growth numbers of its Weekly Leading Index (WLI) to prop up a recession scenario. The reason cited is “…a widespread seasonal adjustment problem that economists have known about for some time.” Another native Capetonian, Prieur du Plessis, who regularly tracks the WLI has posted an excellent analysis of the rationale behind this descision that highlights some interesting subtleties between the […]
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U.S economy almost back to par growth
The U.S Coincident SuperIndex, which estimates U.S economic current growth, is within a whisker of returning to the growth rate normally averaged by the economy after 33 months into an expansion, as shown by the chart on the left. However, cumulative growth since the start of the expansion still remains sub-par (right chart) due to 22 months of sub-par growth. The recent 5 months of growth, coupled with almost reaching the par growth level are encouraging, but the sub-par cumulative expansion […]
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A Recession Fear Indicator
An analysis of Google global search volume for the term “recession” reveals a promising new recession indicator that nailed the official NBER start of the 2008 great recession to within 2 week lag of its peak. It is also interesting to note the spike in mid-to-late August 2011 (around the time the SP-500 bottom that was forming), and subsequent fall in the SuperIndex around the time new recessionary fears peaked. It is unfortunate we do not have history going further […]
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