Note: This commentary has been updated to include this morning's release of the December data for Real Personal Income Less Transfer Receipts.

Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method.

There is, however, a general belief that there are four big indicators that the committee weighs heavily in their cycle identification process. They are:

• Nonfarm Employment
• Industrial Production
• Real Retail Sales
• Real Personal Income (excluding Transfer Receipts)

The Latest Indicator Data

Personal Income (excluding Transfer Receipts) in December rose 0.20% and is up 0.8% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) MoM was down 0.22%. The real number is down 0.5% year-over-year.

A Note on the Excluded Transfer Receipts: These are benefits received for no direct services performed. They include Social Security, Medicare & Medicaid, Unemployment Assistance, and a wide range of other benefits, mostly from the government, but a few from businesses. Here is an illustration of Transfer Receipts as a percent of Personal Income.

The Generic Big Four

The chart and table below illustrate the performance of the generic Big Four with an overlay of a simple average of the four since the end of the Great Recession. The data points show the cumulative percent change from a zero starting point for June 2009.

Here is a percent-off-high chart based on an average of the Big Four. The average of the four was at an all-time high in November 2018.

The next update of the Big Four will be the numbers for Nonfarm Employment for December.

Background Analysis: The Big Four Indicators and Recessions