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Business Cycle Indicators as of 26 February: Consumption Rebound

Summary:
The goods production side of the economy continues to recover, consumption jumps, while other indicators faltered. Some key indicators followed by the NBER Business Cycle Dating Committee. Figure 1: Nonfarm payroll employment (dark blue), Bloomberg consensus as of 2/26 for February nonfarm payroll employment (light blue square), industrial production (red),  personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), consumption in Ch.2012$ (light blue), and monthly GDP in Ch.2012$ (pink), all log normalized to 2020M02=0. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (2/1/2021 release), NBER, and author’s calculations. Manufacturing and trade industry sales data extends only through December; if

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The goods production side of the economy continues to recover, consumption jumps, while other indicators faltered. Some key indicators followed by the NBER Business Cycle Dating Committee.

Business Cycle Indicators as of 26 February: Consumption Rebound

Figure 1: Nonfarm payroll employment (dark blue), Bloomberg consensus as of 2/26 for February nonfarm payroll employment (light blue square), industrial production (red),  personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), consumption in Ch.2012$ (light blue), and monthly GDP in Ch.2012$ (pink), all log normalized to 2020M02=0. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (2/1/2021 release), NBER, and author’s calculations.

Manufacturing and trade industry sales data extends only through December; if retail sales are any guide, this series will recover with February’s data (there seems to be a lag, at least over the last two years).

Business Cycle Indicators as of 26 February: Consumption Rebound

Figure 2: Retail sales ex.-food services, in 1982-84$ (blue, left log scale), and manufacturing and trade industry sales, in Ch.2012$ (brown, right log scale), both in millions of dollars, seasonally adjusted. Source: Census, BLS via FRED, author’s calculations.

As of today, Atlanta Fed, NY Fed, and IHS Markit have Q1 growth nowcasted at 8.8%, 8.7%, and 3.4% SAAR.

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

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