Is The U.S. Economy in a Recession?   

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With conflicting macroeconomic indicators and diverging expert opinions, we reviewed the National Bureau of Economic Research (NBER) recession indicators to determine if the economy is in a recession. They suggest that the answer is no, not yet. 

Figure 1 contains our ‘recession barometer’ which compares the most recent monthly growth for the set of economic indicators that the NBER uses to determine a recession (dotted line) with the average monthly growth during each recession from 1980 through the Great Recession. The pandemic recession was excluded due to its peculiar nature.  The growth of all seven indicators is weak, but not as weak as in past recessions. The employment sector has slowed, and real consumption and personal income growth are close to zero, but growth in trade remains positive.

Figure 1

Source: Federal Reserve Bank of St Louis FRED database, Unlimited Funds calculation

A slow-growing economy does not necessarily translate into a meaningfully greater probability of a recession. Figure 2 contains our latest estimate of the probability of a recession. The probability was estimated using logistic regression with the six factors in Figure 1 as explanatory variables and an indicator variable (1 for recession, 0 otherwise) as the dependent variable. We used data from Jan. 1959 to Sept. 2023.  Based on this model the probability that we are in a recession is about 30 percent.

Figure 2

Source: Federal Reserve Bank of St Louis FRED database, Unlimited Funds calculation

The Atlanta Fed GDP Nowcast estimates Q4 real GDP growth to be about 2.2%. Figure 3 shows a time series of the forecast composition.  As expected the bulk of the growth is due to consumer expenditures, and it appears to be slowing moderately.

Figure 3


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