Does not appear to be a recession that month, or in earlier ones.

Determine 1: CFNAI, in customary deviation models (blue), CFNAI 3-month shifting common (inexperienced). CFNAI normalized to 0 for the pattern progress price. The inexperienced dotted line signifies the brink for growth after a interval of contraction and contraction after a interval of growth, for CFNAI 3 month MA. The lilac shading signifies a hypothetical H1 recession. Supply: Chicago FedAugust launch.

The three-month shifting common could be very barely above zero, indicating progress at historic pattern progress. It’s nicely above the extent suitable with contraction (ie recession). The CFNAI-MA3 tracks recessions outlined by the NBER pretty nicely (see the Chicago Fed web site for required charts), except for the 2007 recession, the place the CFNAI-MA3 crosses the brink in April 2008 (somewhat than January 2008, the month after the height outlined by the NBER).

In truth, the CFNAI’s 3-month shifting common has been above the contraction threshold for the whole interval proven within the chart, so – opposite to some observers’ claims – I do not see a recession within the first half of 2022, nor in August. This level is additional bolstered by the CFNAI diffusion index.

Determine 2: CFNAI broadcast (brown). Under the dotted line tan signifies contraction, above signifies growth. The lilac shading signifies a hypothetical H1 recession. Supply: Chicago FedAugust launch.

The diffusion index can also be above the extent suitable with contraction, after a interval of growth. This measure additionally works fairly nicely, except for signaling an onset of recession in December 2000 somewhat than the contraction of the NBER from April 2001.

Thus, the CFNAI, a weighted common of 85 financial exercise indicators (described right here), means that we aren’t in August 2022, nor prior to now 12 months, in a recession.