Blog

We post occasional thoughts and interesting observations about our U.S recession forecasting methodologies on this blog. To see all the posts on a single page, click here.

Dealing with a runaway market

By on January 18, 2018 in Reflections

Download article as PDF Those of you who have been following us since 2010 will identify us a perma-bulls. Even in the depths of the ECRI 2012 /Hussman recession calls we were firmly bullish on the US economy and stock market – quite contrary to the popular consensus at the time. Those subscribers who have […]

Read full story · Comments are closed

Negative returns for SP500 in next decade

By on August 1, 2017 in Reflections

Download article as PDF The RecessionALERT Valuation Index (RAVI) has been updated for 1Q17 and for the first time since 1999, is forecasting negative 10-year total returns for the SP500: The chart on the right shows that the RAVI continues to forecast SP500 decade-ahead total returns with relative accuracy, especially when one considers that the […]

Read full story · Comments are closed

25 most important US economic indicators animated in 1 minute

By on July 26, 2017 in Reflections

Download article as PDF Here’s something fun we played with after just compiling our June Long leading US Index report for our subscribers

Read full story · Comments are closed

Horrific revisions to HWOL data

By on March 8, 2017 in Reflections

Download article as PDF The Conference Board Help-Wanted-Online (HWOL) program is closely followed by us to get a feel for the labor market. It is one of over two dozen labor indicators we examine. The monthly HWOL data have been produced by the Conference Board since May 2005, replacing the Help Wanted Advertising Index of […]

Read full story · Comments are closed

Mixed Signals from Labor Market

By on November 16, 2016 in Reflections

Download article as PDF We keep getting good news about employment and the labor market. But we rarely see the less optimistic numbers. THE GOOD Yellen’s Labor Dashboard (see here) is looking strong with all but 3 of the 9 components above pre-recession levels: The Employment Trend Index briefly wavered but now seems to be […]

Read full story · Comments are closed

U.S Economy remains vulnerable

By on September 21, 2016 in Reflections

Download article as PDF It is interesting to see the recent re-appearance of articles relating to flashing warning signals of recession (see here and here and here) It is true that some genuinely troubling signals are starting to make themselves known. Let’s look at some of them. Heavy Duty Truck sales, a reliable long-leading indicator […]

Read full story · Comments are closed

Unemployment more widespread than thought

By on August 22, 2016 in Reflections

Download article as PDF The Total Non-farm Payrolls data made another solid print for the month of July 2016, leading to the assumption that all is good with employment in the U.S: Similarly, if we examine the countrywide Civilian Unemployment Rate, we also get reassuring signs: However, if we dig deeper and examine the per-state […]

Read full story · Comments are closed

NBER’s Big-4 Indicators had a narrow miss

By on August 12, 2016 in Reflections

Download article as PDF Reading through all the positive press about jobs numbers and so forth, its hard to comprehend that the 4 main indicators used by the National Buro of Economic Research (NBER) to determine US recessions, had a narrow miss recently. If you recall from our popular 2012 article, the NBER does not […]

Read full story · Comments are closed

Number of countries with back-to-back negative quarterly GDP prints is rising

By on July 1, 2016 in Reflections

Download article as PDF The percentage of 41 OECD countries around the globe that have just posted a negative 1Q2016 on the back of a negative  4Q2015 (old fashion technical recession) has started to rise. Its nothing to be concerned about just yet but the rise itself, although shallow, is something worth watching as 2Q2016 […]

Read full story · Comments are closed

U.S Economy most vulnerable to any shock since 2008

By on June 24, 2016 in Reflections

Download article as PDF The #Brexit vote caught the consensus view off-guard and stock markets, currencies and commodity prices have made large responses. This may be bringing up thoughts if Brexit could be the external shock that marks the decent of the U.S economy. Whilst we will not entertain making predictions on this complex matter, […]

Read full story · Comments are closed

Recession Probability Roundup : Elevated levels

By on April 26, 2016 in Reflections

Download article as PDF NOTE : This is a subscriber-only article that was made open for public viewership on 20 May 2016. A few subscribers have been concerned by the recent jump in recession odds of the Headwinds Index model to 60% A probability of recession of 60% most certainly also implies probability of no […]

Read full story · Comments are closed

Over 30% of States with rising unemployment

By on April 18, 2016 in Reflections

Download article as PDF The March 2016 figures are in for state-wide unemployment and the percentage of states with growing unemployment has risen to over 30% now: The useful thing with this breadth metric is that deterioration in unemployment is made visible long before it shows up in the average national unemployment rate. Whereas the […]

Read full story · Comments are closed

Labor market not as strong as you think

By on April 11, 2016 in Reflections

Download article as PDF The strength of the labor market is constantly being trotted out in defense of the robust status of the US economy, but broad sets of labor data show this not to be the case. First, let us examine a very broad US labor market growth metric: This indicator needs to fall […]

Read full story · Comments are closed

Animation : The incredible US employment recovery

By on April 7, 2016 in Reflections

Download article as PDF Below is an animation of the annual average unemployment rate per U.S state from 2011 onward. It’s quite incredible to see how unemployment was erased state-by-state over the years: However statewide improvements in employment have probably peaked-out as shown in the chart below, which depicts the aggregate (equal weighted) inverse 6-month […]

Read full story · Comments are closed

How can we forecast 30% upside for 2016 with RAVI?

By on April 4, 2016 in Reflections

Download article as PDF The RecessionALERT Valuation Index (RAVI) is currently forecasting 30% growth for 2016 for the SP500 with its 1-year forecast model. “How the heck is this possible given current overvaluation of the market?” we can hear you say. Let us show you how this is calculated so we can put the forecast […]

Read full story · Comments are closed

Risk of U.S Economic Recession

By on February 3, 2016 in Reflections

Download article as PDF A raft of analysts, perma-bears and bloggers are playing fast and loose with the R-word again. This is likely to reach a crescendo with the release today of the unexpected large drop in the ISM non-manufacturing survey.  We recall a time in late 2011 when the mainstream perception was that we […]

Read full story · Comments are closed

Yellen Labor Dashboard reaches target

By on August 12, 2015 in Reflections

Download article as PDF “Full Employment” target reached Shortly after taking up office, Federal Reserve Chair Janet Yellen  used her “jobs data dashboard”  to justify the Fed’s easy money policies and to argue there’s still considerable slack in the labor market  five years after the recession’s end. Seven of the nine gauges on  this dashboard had […]

Read full story · Comments are closed

Things that go bump in the night

By on March 31, 2015 in Reflections

Download article as PDF The U.S economy appears unstoppable right now. Just about every leading and co-incident indicator you can think of is pointing to positive growth. Among the hundreds of indicators we follow for our models on a daily basis, we have discovered a few that are displaying worrying trends and flagging a future recession. […]

Read full story · Comments are closed

SP-500 Returns Forecast, 4Q2014

By on March 24, 2015 in Reflections

Download article as PDF The RecessionALERT Valuation Index (RAVI) is a multifactor valuation model that examines cyclically adjusted trailing SP-500 earnings (various multi-decade horizons), the SP-500 total-return index level, total stock market capitalization, Gross Domestic Product, non-financial corporate equities and liabilities, non-financial corporate business net-worth and percentage of investors’ allocation to stocks versus cash and […]

Read full story · Comments are closed

Stresses are building up in the system

By on February 18, 2015 in Reflections

Download article as PDF Despite a steady rise in the SP-500 Index, clear and persistent financial stresses are starting to build up in the system. We construct a composite of the St. Louis Fed Financial Stress Index, the Cleveland Financial Stress Index, the Kansas City Financial Stress Index and the Chicago Fed National Financial Conditions […]

Read full story · Comments are closed