Business cycle indicators, mid-July | Ecobrowser

Industrial production and manufacturing production fell within the Bloomberg consensus (-0.2% m/m vs. +0.1, -0.5% vs. +0.1, respectively). With this data, we have this picture of some of the key indicators followed by the NBER BCDC.

Figure 1: Non-agricultural employment (dark blue), industrial production (red), personal income excluding transfers 2012, $ (green), manufacturing and trade sales 2012, $ (black), consumption 2012 USD (light blue), and monthly GDP in Ch.2012 $ (pink), all logs normalized to 2020M02 = 0. NBER recession dates, from peak to trough, shaded in grey. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (née Macroeconomic Advisors) (issue 07/01/2022), NBER and author’s calculations.

Given the rapid recovery in all of these series, it becomes a bit difficult to see how things play out when we consider whether we are back in a recession. Here I plot the data for last year.

Figure 2: Non-agricultural employment (dark blue), industrial production (red), personal income excluding transfers 2012, $ (green), manufacturing and trade sales 2012, $ (black), consumption 2012 USD (light blue), and monthly GDP in Ch.2012$ (pink), all logs normalized to 2021M06 = 0. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (née Macroeconomic Advisors) (issue 07/01/2022), NBER and author’s calculations.

While some series look like they have peaked in the past (sales in manufacturing and trade, monthly GDP), others clearly continue to rise (non-farm payrolls, NFP). The NBER BCDC notes that NFP and personal income are given more weight in these series, excluding current transfers. Both continue to rise, with NFP up over 4% year-over-year (in log terms). Industrial production has also risen by more than 4% over the past year, even if data declines have been recorded in the last two months.

In other news, retail sales beat the consensus (1% vs. 0.8% vs. -0.1% prior, m/m).

As of today GDPNow for Q2 is -1.5%, IHS Markit -1.9%, Goldman Sachs tracking +0.7. Today’s Wells Fargo forecast is +0.2, Deutsche Bank’s forecast for today is -0.6%.