So you think we’ve been in a recession since mid-July?

Employment data releases data for July, as well as weekly and Google/big data data through July 29 for the US economy (addition to Part I, Part II, Part 3, Part IV, Part V, Part VIand also “So you think we could have a recession from mid-June” Part I as well as Part II) – answer to Expressed the opinion of the reader (yesterday!yesterday[my mistake – MDC]) “Based on the indicators that I’m monitoring, yes, I think we are in an ongoing recession and I expect a full reset of the economy in the second half of the year.”

Here is an image of the series followed by the NBER Business Cycle Dating Committee, and quarterly GDP and IHS Markit GDP.

Figure 1: Nonfarm payrolls (dark blue), Bloomberg Consensus 1 August (blue+), civil sector employment (orange), industrial production (red), personal income excluding transfers in 2012, $ (green), sales in manufacturing and trade in Ch.2012$ (black), consumption in Ch.2012$ (light blue) and monthly GDP in Ch.2012$ (pink), official GDP (blue bars), all logs normalized to 2021M11= 0. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (née Macroeconomic Advisors) (issue 8/1/2022), NBER and author’s calculations.

As seen above, the NFP increase of 528K far exceeded the Bloomberg consensus of 250K. In addition, the civilian employment series based on household series also increased by 179K.

Concerns are often raised about the implications of the BLS birth/death model for firms, which is an important input in the process of adjusting sampling at turning points. The civil sector employment data series, adjusted according to the non-agricultural wage bill concept, is not affected by this problem; he also moved up to 611K.

Figure 2: Non-farm employment (blue), civil sector employment over 16 (brown), and NFP-adjusted civil sector employment (turquoise), all in the 000s, ca Source: BLS (July edition) and BLS.

The unemployment rate, which is not a central factor in BCDC discussions, also does not signal a recession when using the Sam Rule.

Figure 3: Unemployment rate U6 (black), Bloomberg consensus 8/4 (black +), hypothetical rate required for Sam’s rule to work (red square). Source: BLS via FRED, Bloomberg, author’s calculations.

In fact, the unemployment rate fallen from 3.6% to 3.5%.

These data refer to mid-July, when the labor market survey was carried out. In general, for July, we can look at the weekly data. The Lewis-Mertens-Stock weekly economic index is still above the trend:

Source: New York Fed via FREDas of 08/04/2022.