CFNAI on the supposed recession of 2022H1

Regarding the view that the US economy was in recession earlier this year (eg, this observer less than a month ago), the CFNAI has the following:

The CFNAI 3-month moving average fell below 0 (i.e. fell below trend growth) in May and June. Notes to the CFNAI indicate “After a period of economic expansion, an increased probability of a recession has historically been associated with a CFNAI-MA3 value of less than -0.70.” CFNAI-MA3 did not breach this threshold.

As for the indicators from the decrease or increase in the number of indicators (ie the spread indicator), we have the following picture.

From notes:

The CFNAI Diffusion Index is the three-month moving average of the sum of the absolute values ​​of the weights of the underlying indices whose contribution to the CFNAI is positive in a given month minus the sum of the absolute values ​​of the weights of those indices that contribute negative or neutral in a given month. Periods of economic expansion have historically been associated with CFNAI Diffusion Index values ​​above -0.35.

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

This entry was posted on by Minzy Chen.

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