Figure 1: Nonfarm payroll work, NFP (dark blue), Bloomberg agreement as of 11/3 (blue +), civilian work (orange), industrial production (red), individual earnings omitting transfers in Ch.2012$ (green), production and trade sales in Ch.2012$ (black), usage in Ch.2012$ (light blue), and monthly GDP in Ch.2012$ (pink), all log normalized to 2021M11= 0. Thats about 7% of GDP, so we may expect a contraction on the order of 4% of GDP (permitting for stepping in, underlying GDP growth), and thats about what we have actually seen.5. Thus, from this viewpoint, H1 could be seen as a technical economic crisis, but which I indicate an official decline in GDP without a hidden business cycle.
Figure 1: Nonfarm payroll employment, NFP (dark blue), Bloomberg consensus as of 11/3 (blue +), civilian employment (orange), commercial production (red), personal earnings leaving out transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), consumption in Ch.2012$ (light blue), and month-to-month GDP in Ch.2012$ (pink), all log normalized to 2021M11= 0. Lilac shading denotes a theoretical recession in 2022H1. Source: BLS, Federal Reserve, BEA, through FRED, IHS Markit (nee Macroeconomic Advisers) (11/1/2022 release), and authors calculations.
Its interesting to consider what some alternative procedures suggest (consisting of GDO which the NBER BCDC does think about):.
and on the eve of the October employment report. With month-to-month GDP on Tuesday, and intake and earnings recently, we have the following photo of some crucial series followed by the NBER Service Cycle Dating Committee (NBER BCDC):.
Figure 2: Monthly GDP in Ch.2012$ (pink), Brave-Butters-Kelley growth rate based index (teal), and coincident index (tan), all log normalized to 2021M11= 0. Lilac shading signifies a theoretical economic downturn in 2022H1. Source: BLS, Federal Reserve, BEA, through FRED, IHS Markit (nee Macroeconomic Advisers) (11/1/2022 release), and authors calculations.
The big question which surrounds these images is how work signs can diverge a lot from income/production indices (the coincident index is driven mainly by labor market information).
What about an H1 recession, according to this remark:.
1. H1 was an economic downturn by the most frequently used standard2. The H1 decline did not have some of the qualities of many economic crises, significantly, unemployment did not rise3. This sort of phenomena was last seen in 1945 when US defense costs collapsed, that is, a decline in GDP without a material decrease in employment.4. Therefore, the H1 slump plausibly could be discussed by aggressively contractionary fiscal policy. Biden simply yesterday crowed that he had actually reduced the budget plan deficit by $1.4 trillion in little over a year. Thats about 7% of GDP, so we might expect a contraction on the order of 4% of GDP (enabling stepping in, underlying GDP development), whichs about what we have actually seen.5. Thus, from this perspective, H1 might be seen as a technical economic downturn, but which I suggest a formal slump in GDP without an underlying business cycle.
In any case, only broad based production indications like GDP subject to huge modifications follow an economic downturn in H1.
