For over 2 years now, our commentary has made the point that the labor market – more particularly Payroll Employment and the Employment Level household surveys – were the “last man standing” in a sea of negative or weak leading data. For this reason, the NBER coincident models (all 3 of them) were not confirming recession. However the latest Friday BLS downward revisions, on top of countless before them, are becoming the straw that could break the camels’ back. The […]
Tag Archives | recession
Yield curve inversion forecast update – Dec ’18
Based on the methodology discussed here we hereby update our U.S Yield-curve inversion forecast and subsequent recession and stock market peak forecasts. All the forecast dates have moved foward by 1 month:
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Yield curve inversion & recession forecast
There is naturally a lot of focus on the U.S yield-curve at the moment, as it moves relentlessly toward inversion (when short-term rates are higher than long-term rates.) Can the history of the yield-curve inversion provide for useful forecasting as to the start dates of the next U.S recession? The 10’s vs. 1’s yield-curve and U.S recessions in the post-war era are displayed below, where it is clear that the nine recessions since 1956 were predicted by yield-curve inversion, with […]
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U.S Economy remains vulnerable
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 for US recession, has recently tanked: Growth in Total Freight Shipments and Revenues has been negative since early 2015:: The Inventory-to-Sales ratio was one of the first trouble spots […]
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Unemployment more widespread than thought
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 unemployment rates for 52 U.S states from the Bureau of Labor Statistics, a very different picture emerges: The average state unemployment rate seems to be putting in a bottom, […]
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Labor market not as strong as you think
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 below -10 before the odds of recession skyrocket to a near certainty and so whilst there is no cause for immediate alarm, it is clear the indicator is not […]
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Risk of U.S Economic Recession
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 were headed for recession and we posted a widely read article that went against the mainstream, and attracted attention of some respected names: Given the amount of attention looming […]
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Global Slowdown – Does it affect the U.S?
There is no question that the Global Economy is languishing. Now, with weakness in US economic data starting to filter through, the big question that arises is if the U.S will be dragged down by the global economy. The U.S is a very insular economy and whilst there can be no doubt that global economic slowdowns do have an effect on the U.S economy, we show that the correlation between global recessions and U.S recessions is surprisingly low. EXHIBIT-A : Global […]
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Things that go bump in the night
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. It should be pointed out that a handful of indicators flagging recession should not mean we have to push the panic button. A large raft of indicators all concurring […]
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