Trump Recession Indicators

U.S. Composite Leading Economic Indicators has constructed a Weekly Leading Economic Index (WLEI) for the U.S Economy that draws from over 50  time-series from the following broad categories:

  1. Corporate Bond Market Composite
  2. Treasury Bond Market Composite
  3. Stock Market Composite
  4. Labor Market Composite
  5. Credit Market Composite
Recession Alert WLEI Jan 11 2019

ECRI  has a US-centric Leading Economic Index that has been in use for a longer time than Recession Alert’s index above. Unlike Recession Alert, the ECRI WLI (Weekly Leading Index) does not apply a probability of recession axis to their WLI, but the index does a good job in highlighting turning points present and future in the US economy, and as such, “periods of vulnerability.”

According to ECRI’s webiste, the ECRI WLI is ” designed to predict the timing of future changes in the economy’s direction. They signal those turns before the fact, and well before the consensus. ECRI’s focus is on identifying when those changes in direction will occur (see chart).

According to the mainstream view, recessions are caused by shocks propagating through the economy. In contrast, our framework, based on many decades of research, finds that endogenous cyclical forces periodically open up windows of cyclical vulnerability that make it much easier for exogenous shocks to precipitate recessions. In the absence of cyclical weakness, such shocks are not recessionary. Because our leading indexes monitor when the economy becomes susceptible to shocks, they effectively anticipate recessions.”

ECRI Weekly Leading Index Update Jan 11 2019

Global Composite Leading Economic Indicators

OECD composite leading indicator (CLI) is designed to provide early signals of turning points in business cycles showing fluctuation of the economic activity around its long term potential level. CLIs show short-term economic movements in qualitative rather than quantitative terms.

10/12/2018 – Composite leading indicators (CLIs), designed to anticipate turning points in economic activity relative to trend six to nine months ahead, continue to point to easing growth momentum in the OECD area as a whole.  

Easing growth momentum remains the assessment for the United Kingdom, Canada and the euro area as a whole, including Germany, France and Italy, with similar signs now also emerging in the United States