Business cycle indicators for July 27

Here are some of the key indicators followed by the NBER Business Cycle Dating Committee. I added civic employment to the set of indicators. Below are the recession and recovery trends to date, with some assumptions for June consumption, May and June sales (since released July 29), and employment in July (released August 5).

Figure 1: Non-farm employment (dark blue), July 27 Bloomberg consensus (blue +) industrial production (red), personal income excluding transfers 2012, $ (green), manufacturing and trade sales 2012 , $ (black) , sales forecast based on retail sales (black squares), consumption in 2012, $ (light blue), consumption forecast based on retail sales and food sales (light blue squares) and monthly GDP in 2012 ., $ (pink), all log normalized to 2020M02=0. Recession dates as determined by the NBER, from peak to trough, are shaded in grey. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (née Macroeconomic Advisors) (issue 07/01/2022), NBER and author’s calculations.

Since we only have manufacturing and trade sales in April and consumption in May, I projected them based on a log regression of the first differences from 2021M04 onwards. For consumption, the adjusted R2 is 72%, for sales it is 43%.

Sales in manufacturing and trade continue to decline, as might be expected, as consumption shifts from goods to services. Consumption is practically stabilizing, rising by 0.6% year on year. Bloomberg’s NFP consensus points to +255k, indicating continued recovery in the labor market.