Thursday, August 30, 2012

We didn't start a recession in July, either

- by New Deal democrat

With the release of personal income this morning, we now know the values of all four series thought to guide the NBER's recession dating decisions. While all of these series are subject to revisions, of course, as of now the simple fact is that all four rose in July, and three of the four are at post-recession records. So unless they are revised significantly downward, the simple fact is that no new recesion started in July.

Meanwhile, Dwayne Van Vuuren of RecessionAlert and others have succeeded in closely duplicating ECRI's WLI. I was privileged to take part in their effort by helping them identify the relevant variables. According to their calculations the WLI's growth index likely turned positive this week. Further, the YoY values for the index are also close to turning positive. Based on past history, it is extremely unlikely that such values could coincide with a recession.

On the negative side of the ledger, last week I hypothesized that increasing gas pirices wouild disrupt the post-recession seasonality of initial jobless claims declining during the third quarter. This week's unrevised number was higher again, and the four week average has moved back over 370,000. Hardly definitive, but worth watching carefully. I would show you a handy-dandy graph, but due to a glitch in the St. Louis FRED's system, I am unable to do that.