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Business Cycle Indicators, August 7th

Summary:
With today’s employment situation release, here are five key indicators referenced by the NBER’s Business Cycle Dating Committee in Figure 1: Nonfarm payroll employment (blue), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), and monthly GDP in Ch.2012$ (pink), all log normalized to 2019M02=0. Figure 1: Nonfarm payroll employment (blue), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), and monthly GDP in Ch.2012$ (pink), all log normalized to 2019M02=0. Source: BLS, Federal Reserve, BEA, via FRED, Macroeconomic Advisers (8/3 release), NBER, and author’s calculations. Since the graph is in log-deviations, one can

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With today’s employment situation release, here are five key indicators referenced by the NBER’s Business Cycle Dating Committee in Figure 1: Nonfarm payroll employment (blue), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), and monthly GDP in Ch.2012$ (pink), all log normalized to 2019M02=0.

Business Cycle Indicators, August 7th

Figure 1: Nonfarm payroll employment (blue), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), and monthly GDP in Ch.2012$ (pink), all log normalized to 2019M02=0. Source: BLS, Federal Reserve, BEA, via FRED, Macroeconomic Advisers (8/3 release), NBER, and author’s calculations.

Since the graph is in log-deviations, one can read off the slope the growth rate. Nonfarm payroll employment has clearly decelerated substantially, matching pretty closely the Bloomberg consensus, and above the implied level gleaned from the Goldman Sachs employment tracker. Employment is now 11.2% below peak (in log terms).

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

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