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Business Cycle Indicators, Mid-October

Summary:
Here is a graph of some key indicators followed by the NBER Business Cycle Dating Committee, including industrial production, which missed expectations (actual -1.3% vs. +0.2% Bloomberg consensus, m/m not annualized): Figure 1: Nonfarm payroll employment from August release (dark blue), 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. NBER defined recession dates shaded gray. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (10/1/2021 release), NBER, and author’s calculations. Industrial production was hit partly by after-effects of Hurricane Ida, and also (in

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Here is a graph of some key indicators followed by the NBER Business Cycle Dating Committee, including industrial production, which missed expectations (actual -1.3% vs. +0.2% Bloomberg consensus, m/m not annualized):

Business Cycle Indicators, Mid-October

Figure 1: Nonfarm payroll employment from August release (dark blue), 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. NBER defined recession dates shaded gray. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (10/1/2021 release), NBER, and author’s calculations.

Industrial production was hit partly by after-effects of Hurricane Ida, and also (in manufacturing) by the reductions in auto production.

Business Cycle Indicators, Mid-October

Figure 2: Industrial production (red), and manufacturing production (teal), both in logs, 2020M02=0. NBER defined recession dates shaded gray. Source: Federal Reserve Board via FRED, NBER, and author’s calculations.

Manufacturing also missed expectations, at -0.7% vs. +0.1% m/m not annualized. That’s two consecutive months of declines for both industrial and manufacturing production.

Business Cycle Indicators, Mid-October

Figure 3: Manufacturing production (teal), and auto and light duty vehicle production (pink), both in logs, 2020M02=0. NBER defined recession dates shaded gray. Source: Federal Reserve Board via FRED, NBER, and author’s calculations.

We are lagging on measures of real manufacturing and trade industry sales (last observation is July).  It might be tempting to infer August numbers from some related series, e.g., retail sales ex.-food services.

Business Cycle Indicators, Mid-October

Figure 4: Manufacturing and trade industries sales (black), retail sales ex.-food deflated by CPI-all (tan), deflated by PPI-finished goods (green), all in logs, 2020M02=0. NBER defined recession dates shaded gray. Source: BEA, BLS via FRED, NBER, and author’s calculations.

Clearly the linkage between manufacturing and trade sales and retail sales is loose, so it’s not clear what one can say about the former series.

Summing up, the recovery has clearly slowed down in September.

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

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