Previously I showed some skepticism with the likes of ECRI and BNP Paribas when in Q3 2011 they asserted that the US Economy was tipping into a double dip recession. Now that Q4 is in the books, and tracking for 3.5% GDP, I thought it was time to look at some coincidence indicators for the quarter since many have pointed out recessions often begin in the last month of a quarter that ends up having a positive GDP print.
So yesterday I took a look at a few coincidence indicators and noticed three with rather solid records of showing when a recession had started, while not doing much on the prediction end.
All charts are for the entirety of the data set, and recessions are shaded in red.
Frequently referenced in the more bullish cases is the uniform trend in improving claims. Looking at the four week moving average, historically no recessions have started in an improving claims environment.
ISM Manufacturing PMI: only one recession began with a PMI over 52 (Q4 1973). All post war recession have begun after sharp drops in this measure. The average PMI at the beginning of a recession has been 46.9
And just out yesterday, a graph I had not looked at before, year over year growth in total consumer credit. In all post war recessions but one (Q2 1981 where it lagged by two months) growth in total consumer credit had decelerated before the beginning of a recession. The latest data showed growth accelerating further.
For the time being it looks as if there is no reason for great concern of recessionary pressures.