Business Cycle Indicators At June’s Start

With the release of monthly GDP today, and income and consumption earlier, we have the following picture of series followed by the NBER BCDC.

Figure 1: Nonfarm payroll employment (dark blue), Bloomberg consensus of 6/1 for employment (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, peak-to-trough, shaded gray. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (6/1/2022 release), NBER, and author’s calculations.

Manufacturing and trade sales fell more than what I forecasted using retail sales, while consumption grew faster than I forecasted using retail sales and food services, in this mid-May post.

IHS Markit notes:

Monthly GDP rose 0.5% in April, more than reversing a 0.3% decline in March that was revised up from a previously estimated 0.4% decline. The increase in monthly GDP in April mainly reflected positive contributions from personal consumption expenditures and net exports.

With the second release of official Q1 GDP, and IHS Markit monthly GDP, we have the following picture.

Figure 2: GDP (blue bar), GDPNow nowcast of 6/1 (brown bar), and monthly GDP (black line), in billions Ch.2012$, SAAR, all on log scale. Source: BEA, Q1 second release, Atlanta Fed 6/1/2022, IHS Market 6/1/2022. 

In sum, rising industrial production, income, consumption, and employment in April suggest a recession is not yet imminent, despite the flatlining in monthly GDP November-March.