(Mis)Leading Economic Indicators Predicted A Recession That Didn’t Happen… Yet

Posted October 28, 2023

For more than a year, most economists, me included, have expected the United States economy to fall into a Recession.  But that hasn’t happened.

In fact, on Thursday it was reported that the economy grew by a very strong 4.9% in the third quarter.

The new Macro Watch video examines a series of Leading Economic Indicators that have been reliable in predicting previous Recessions.  These indicators provide important insights into nearly all the major parts of the economy, including the financial markets, manufacturing, the housing sector, employment, and credit.

They are:

1. The Conference Board’s Leading Economic Index
2. The Yield Curve
3. The Stock Market
4. The PMI: New Orders Index
5. Manufacturers’ New Orders: Nondefense Capital Goods Excluding Aircraft
6. Manufacturers’ New Orders: Consumer Goods 
7. Building Permits
8. Housing Starts
9. Average Weekly Manufacturing Hours Worked
10. Initial Jobless Claims
11. Consumer Confidence
12. M2
13. Bank Lending Standards
14. Total Credit Growth Adjusted for Inflation

The video shows that over the last year to year and a half, these leading indicators have been misleading, in that they have pointed to a Recession that hasn’t occurred – at least not yet. 

The video also discusses what these indicators currently suggest about the outlook for economic growth during the months ahead.

For all the details, Macro Watch subscribers can log in and watch this 20-minute video now.  There are also 56 slides that subscribers can download.

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