Business Cycle Indicators as of December 2022

With the release of personal consumption and income data for October, we have the following picture of key series followed by NBER BCDC (along with monthly GDP from IHS Markit, formerly from Macroeconomic Advisors).

Figure 1: Nonfarm Employment, NFP (dark blue), Bloomberg Consensus Dec 1 (blue+), Civil Sector Employment (orange), Industrial Production (Red), Personal Income excluding transfers in 2012 (Green), Manufacturing and sales trade in Ch.2012$ (black), consumption in Ch.2012$ (light blue) and monthly GDP in Ch.2012$ (pink), GDP (blue bars), all logs normalized to 2021M11=0. Q3 Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisors) (issue 12/01/2022) and the author’s calculations.

Personal income excluding current transfers and consumption continued to grow. While GDP for the third quarter was revised upward by 0.3 p.p. Monthly GDP IHS Markit rose in October

Monthly GDP rose 0.3% in October after declining 0.5% in September. The latter was revised down by 0.4 percentage points. Monthly GDP growth in October was more than supported by a solid increase in real personal consumption spending. In other countries, growth in October was recorded in investment in fixed assets, non-agricultural inventory and other, while investment in residential real estate and net exports were recorded decline.

GDPNow is currently 2.8% QoQ SAAR in Q4. Given the likely changes in GDP and the evolution of the GDO, it seems to me (still) unlikely that a recession occurred in the first half of 2022. However, a recession in 2023 is likely yield curve inversion as well as other predictors.