Still Waiting for the Recession, Weekly Data through 12/30


Through the year’s end, Year-on-Year growth is accelerating modestly, according to the WEI.

Figure 1: Lewis-Mertens-Stock Weekly Economic Index (blue), and Baumeister-Leiva-Leon-Sims Weekly Economic Conditions Index for US plus 2% trend (green), all y/y growth rate in %. Source: NY Fed via FREDWECI, accessed 1/4, and author’s calculations.

The WECI+2% thru 12/30 is (2.13%), while WEI reading is 2.44%. The latter is interpretable as a y/y quarter growth of 2.23% if the 2.44% reading were to persist for an entire quarter. The Baumeister et al. reading of +0.13% is interpreted as a 0.13% growth rate above the long term trend growth rate. Average growth of US GDP over the 2000-19 period is about 2%, so this implies a 2.13% growth rate for the year ending 12/30.

Recall the WEI relies on correlations in ten series available at the weekly frequency (e.g., unemployment claims, fuel sales, retail sales), while the WECI relies on a mixed frequency dynamic factor model.

When added to the monthly indicators and nowcasts shown in yesterday’s post on business cycle measures followed by the NBER BCDC, it’s hard to see the recession as having occurred in 2023.



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