ECRI Recession Call 2012
... 9 Days Left
Are we in a new recession, as ECRI has forecast would be the case by the end of this month?
Month-to-month data is often noisy, and also delayed by a full month, and while the nonfarm payroll numbers have been a little soft the past three months, they have still been a long way away from contraction, which is almost a necessary requisite of recessions in the US. As such, a better job-related recession signal could be one that is both timelier, and one which could be smoothed out, and that would be Initial Unemployment Claims.
Initial Unemployment Claims are (also) notoriously a bit noisy, so the preferred way to look at them is through a 4-week moving average. Then finally, noise can be smoothed out even more by comparing the above referenced 4-week moving average in percentage change Year-over-Year terms.
Prior to US recessions, the Year-over-Year 4 week moving average usually trends higher and higher for several months, to even a few years, leading up to the start of the new recession, and then begins going parabolic at some point during the actual NBER-defined recession.
Below is this graph of our Year-over-Year 4-week moving average of initial jobless claims.
As can be seen above, this very reliable leading to coincident indicator not only does not support the by-mid-2012 ECRI recession call, it doesn't even suggest that a new recession will begin anytime within the next several months, either.