En Route to Recession #2

Looking at what some chosen indicators are telling us so far

This is the second instalment of my “recession watch” series. I call it “En Route to Recession”. Merely saying that a recession is coming, like what many of the usual Fintwit gurus call for, is meaningless. Yes, we will have a recession. When and how hard will it be are the real questions.

I usually stay away from predicting recessions as it’s generally a futile task. I leave it to the great economists out there and their models, which seem to have some calibration issues. I can not blame them. This cycle is not like any we have seen before, certainly not in the recent past. The monetary tightening seemed to have little impact on economic performance so far, yet many expect those lags to kick in at any point now.

Source: Dall-e

Does a recession even matter? I’d argue that it certainly does, but that when you see the numbers coming in, pro-cyclical measures and a hopefully active central bank will work in tandem to turn the corner. Looking for a recession in data is like going to your annual health check just to be told that you need to reduce your alcohol consumption. The damage has already been done.

This, however, shouldn’t stop us from looking at what is likely to transpire in the months and quarters ahead. I’m therefore providing a few indicators for you to scan through in order to assess such a probability regularly. There are 13 to go through, so bear with me as we tackle them individually.

Let’s dig in my fellow economists.