Market Overview Analysis by James Picerno covering: . Read James Picerno's latest article on Investing.com
Judging by the analysis in some circles, a recession is a forgone conclusion. More cautious types argue that the expansion continues, but just barely, and that a formal recession will likely start at some point in the next several months. As usual, it’s impossible to fully discount any given forecast. But a review of a broad range of economic and financial data still leaves room for debate. Yes, macro risk is rising for the US, but the economy has not yet reached the tipping point.
The Sahm indicator has a strong track record and so its warning shouldn’t be dismissed. Nonetheless, relying on one indicator is itself risky for the simple reason that no metric or model is flawless in business-cycle analysis. Indeed, it wasn’t that long ago that analysts praised the near-flawless track record of the Treasury yield curve as a reliable recession indicator. But more than a year and a half after the curve inverted, the US economy has continued to expand.
Nonetheless, near-term forward estimates of the two indicators shown above suggest that US economic activity is stabilizing, albeit at a slow/sluggish pace through August. Meanwhile, a review of other business cycle indicators points to relative strength in output. The Philly Fed’s ADS Index and the Dallas Fed’s Weekly Economic Index, for instance, are both reflecting a clear growth bias through the end of June.
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