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One of the easiest ways to measure the trending direction of the US economy or any market-based economy for that matter is to aggregate the largest, real-time components of the major economic sectors. 

We can break down the economy into income, sales, production, and employment. Using popular and reliable measures of each of these sectors of the economy, we can aggregate a coincident index and measure the state of economic growth at any point in time. 

It should be clearly noted that this index is not a leading indicator but rather a coincident indicator. 

When studying economic cycles, we are never solely looking at the nominal rate of growth but rather we are focused on the rate of change in the growth rate of any index, including the EPB Macro Research Coincident Index (EPBMRCI). 

As the chart of the EPBMRCI below shows, graphed in rate of change terms, after cycling lower in 2015-2016 and showing a cyclical recovery in 2016-2017, the US economy is once again cycling lower. 

EPBMRCI cycling lower.

EPBMRCI cycling lower.

While a recession is not currently in the immediate forecast, the current rate of change in growth is consistent with past recessionary periods which invariably puts a recession in the conversation. 

In order to declare the window for a possible recession has opened, we need to see further declines in the growth rate of various measures of income, sales, production, and employment. 

More on this to follow.