CFNAI on the Putative Recession of 2022H1

Concerning the view the US economic system was in recession earlier this 12 months (e.g., this observer lower than a month in the past), the CFNAI has the next takes:

The three month transferring common of the CFNAI dropped beneath 0 (i.e., dropped beneath pattern progress) in Could and June.  The notes for the CFNAI point out “Following a interval of financial enlargement, an growing probability of a recession has traditionally been related to a CFNAI-MA3 worth beneath –0.70.” The CFNAI-MA3 didn’t breach this threshold.

As for the indications from the variety of indicators falling or rising (i.e., a diffusion index), we now have the next image.

From the notes:

The CFNAI Diffusion Index represents the three-month transferring common of the sum of absolutely the values of the weights for the underlying indicators whose contribution to the CFNAI is optimistic in a given month much less the sum of absolutely the values of the weights for these indicators whose contribution is adverse or impartial in a given month. Durations of financial enlargement have traditionally been related to values of the CFNAI Diffusion Index above –0.35.

So, I (nonetheless) don’t see a recession in 2022H1.

 

This entry was posted on by Menzie Chinn.