October 2020 Coincident Indices Generally Improve But Most Remain In Contraction Year-Over-Year

The year-over-year rate of growth of the majority of coincident indices improved relative to last month - but mostly remain in contraction. It should be obvious the economy entered a recession in March 2020 but likely exited in May or June. A recession ends when the economy starts improving.

Analyst Opinion of the Current Status of the Coincident Indicators

The reality is that most of the economic indicators have moderate to significant backward revision - and this month they are generally showing improved growth. Out of this group of coincident indicators discussed in this post, only ECRI, The New York Fed's Weekly Economic Indicator, and the Aruoba-Diebold-Scotti business conditions index have no backward revision - and are designed to track the economy in real-time.

Economic indicators that coincide with economic movements are coincident indicators. Coincident indicators by definition do not provide a forward economic view. However, trends are valid until they are no longer valid, making the trend lines on the coincident indicators a forward forecasting tool.

Note that the indices discussed in this post are the last release of that index,

Generally, the coincident indices are showing modest growth but are in contraction year-over-year. Econintersect's analysis of the coincident indices is that:

  • The Philly Fed US Coincident index year-over-year rate of growth improved at a slower rate than last month but remains in contraction.
  • The Aruoba-Diebold-Scotti business conditions show improving conditions - but the index is now barely in expansion and showing the growth rate is slowing.
  • The New York Fed's Weekly Economic Indicator shows modest growth in November
  • The rate of growth of the Conference Board Coincident Index improved but remains in contraction.
  • ECRI's Coincident Index's rate of growth shows improvement but remains in contraction.
  • The CFNAI rate of growth slowed but remains in expansion.
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