Business Cycle Indicators as of mid-January 2023

With the release of December 2022 Industrial Production (-0.7% vs. -0.1 Bloomberg consensus, month-over-month), we have the following picture of business cycle indicators followed by the NBER Business Cycle Dating Committee, along with IHS Markit’s monthly GDP:

Figure 1: Nonfarm Payroll Employment, NFP (dark blue), Bloomberg Consensus as of 1/18 (blue +), Civilian Employment (orange), Industrial Production (red), Personal Income Excluding Transfers in Chapter 2012 USD (green) and Manufacturing Trade Sales in Ch.2012$ (black), Consumption in Ch.2012$ (light blue), Monthly GDP in Ch.2012$ (pink), GDP (blue bars), all logarithms normal to 2021M11 = 0 Q3 Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisors) (issue 1/3/2023), Bloomberg (as of 1/18) and author accounts.

The decline in industrial production was a big negative surprise. In light of this report and others, the Federal Reserve Bank of Atlanta lowered its real time report rating for the fourth quarter from 4.1% qoq to 3.5%.

Figure 2: GDP (black), WSJ means Jan 2023 Survey (blue), Oct 2022 (graph), GDP is now 1/18/23 (red square). Source: BEA 2022Q3 3rd rel, WSJ (various), Atlanta Fed.

Hence, despite the significant decline in industrial production (remember NBER BCDC puts primary weight on non-farm payrolls and ex-personal income transfers), the Atlanta Fed statistic still points to positive GDP growth for the fourth quarter.

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