One key economic metric that I watch for recession indication are the State Coincident Indexes put out by the Federal Reserve of Philadelphia (link below). They have deteriorated significantly over the last 4-6 months. Currently the values are in line with the economy being within 6 months of a recession based on past performance.
The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.
The imugr link below shows the number of states with negative month-to-month growth versus positive month-to-month growth on one axis and number of states with significant month-to-month growth (excludes states with low growth) versus negative month-to-month growth on the other axis. Dots in red are past months that fell within 6 months of a recession. The green line with dots are the last 6 month trend. The latest “October” results are marked in text.
If we do not go into a recession in the next 6 months, the “October” mark on the graph would be the first time since the data series began in 1979 that the indicator has gotten this low without a recession following.
https://www.philadelphiafed.org/surveys-and-data/regional-economic-analysis/state-coincident-indexes
