I am a big fan of GDPplus as a recession indicator. But it’s subject to revisions. The revisions today were major and to the upside. 
The Philadelphia Fed GDPplus It’s a blend, but not an average, of Gross Domestic Product (GDP) and Gross Domestic Income (GDI).
Improving GDP Measurement: A Measurement-Error Perspective
Please consider a 2013 working paper on GDPplus, Improving GDP Measurement: A Measurement-Error Perspective
Aggregate real output is surely the most fundamental and important concept in macroeconomic theory. Surprisingly, however, significant uncertainty still surrounds its measurement. In the U.S., in particular, two often-divergent GDP estimates exist, a widely-used expenditure-side version, GDPE [widely called GDP], and a much less widely-used income-side version, GDPI [GDI].
Nalewaik (2010) and Fixler and Nalewaik (2009) make clear that, at the very least, GDPI deserves serious attention and may even have properties in certain respects superior to those of GDPE. That is, if forced to choose between GDPE and GDPI , a surprisingly strong case exists for GDPI. But of course one is not forced to choose between GDPE and GDPI, and a GDP estimate based on both GDPE and GDPI may be superior to either one alone.
The rest of the paper is for Geeks only. The important points are as follows.
A strong case can be made for accepting GDI as a better measure of GDP but a blend, not an average, would be even better.
I put that theory to test by looking at every recession since 1960, 9 cases in all as shown by the lead chart.
GDPplus Recession Signals
In 100 percent of the cases, with no false signals, no misses, and no lead times more than two quarters, every time GDPplus had two consecutive quarters of negative growth, the economy was in recession.
And with a single exception of a negative 0.1 print in 2012, every time GDPplus was negative for even one quarter, the economy was in recession or headed there within two quarters.
I see today that the -0.1 percent in 2012 was revised lower to -0.5 percent. The BEA made huge revisions today dating back years.
GDPplus Chart from Second Revision (Previous Release)
The GDPplus numbers for 2022 Q4, 2023 Q1, and 2023 Q2 went from -1.2%, -0.7%, and +0.6% to -0.6%, +0.6%, and +1.1% respectively.
Don’t lay this on the Philadelphia Fed, this is entirely due to BEA revisions.
GDPplus vs recession Since 2007
In addition to providing a better signal (note the 2008 and 2020 arrows), GDPplus is a much smoother chart month to month.
Many people believe Covid caused the 2022 recession. GDPplus shows that a recession was baked in the cake anyway. Covid certainly made things much worse.
Question of the Day
Q: So, was there a recession in 2022 or not?
A: I will tell you the answer if you tell me what the revisions look like in a few months.
GDPplus is a very reliable indictor once the BEA revisions are in place.
The Fed Is Making Decisions on Poor, Untimely Data, Frequently Revised
On September 1, I commented Jobs Rise by 187,000 But 110,000 Negative Revisions and Unemployment Soars by 514,000
Accounting for negative revisions, jobs effectively increased by 77,000 while unemployment surges as people looking for work can’t find it. Bloomberg labeled this “Goldilocks”.
Full time employment is down by 150,000 since January of 2023.
BLS Job Revision Data
Meanwhile, please note The Fed Is Making Decisions on Poor, Untimely Data, Frequently Revised
As you can see, the third revisions are negative for all of 2023. And worse yet, the Fed is clueless about what inflation really is.
re: ” the Fed is clueless about what inflation really is.”
https://www.cbsnews.com/news/homes-for-sale-affordable-housing-prices/
“Researchers examined the median home prices last year for roughly 575 U.S. counties and found that home prices in 99% of those areas are beyond the reach of the average income earner, who makes $71,214 a year, according to ATTOM..”
Basic human needs?
I would require a lot more information, before giving this lack of information a second thought…
“Researchers examined”
WHO exactly are those Researchers?
“median home prices last year for roughly 575 U.S. counties”
WHAT is the “roughly” Exact Quantity and Exact Name of those 575 Counties?
WHAT was the Exact Median Home Price Amount?
“found that home prices in 99% of those areas are beyond the reach of the average income earner, who makes $71,214 a year”
99% of WHAT AREAS Exactly? WHO’s Average Income Exactly? WHAT Exactly is the Industry Making 71K A Year on Average?
Ah, revisions…
1) The check is already in the mail.
2) The dog ate my homework.
3) &c, &c, &c…
So, less of a chance of a recession. With this, employment data better than expected and oil rallying, bond bulls are likely to get skewered again.
– Big Positive Revisions Decrease Likelihood a Recession Happened.
Well this certainly shows and tells us, that “Revisions” can make things look anyway you want/need them too, now doesn’t it…
For comparison, what other “Big Revisions” to numbers changed the way things were looked at? Likely suspects to altered er.. Big Revisions:
1. Recession 2. Aliens 3. War in Ukraine 4. Climate Change 5. School Curriculum 6. Borders 7. Mask 8. J6 9.Medicines 10. Vaccines
Anyone that thinks we are not in, have not been in, or one isn’t going to occur is delusional at best, or deaf, dumb, and blind in the absolute worst case, unfortunately.
Are we going to absent minded enough to also say that interest rates, Gas, Oil, Food, Rent, Inflation, add more items, are all Not going up, haven’t gone up, and won’t be going up in the future? Then I would say the same about those too…
Things are getting far worse off and quickly now. Nothing concrete is being done to change that trajectory that I can see. I don’t hear any positive “Real News” but lots of wishes, hopes, dreams, visions, etc, Nothing meaningful in other words.
So, based on what you said, what’s your plan to improve your personal situation?
Well Papa, over the past few years I have done a lot of things, but these are obviously specific to me, and I am not suggesting anything to do, and I am not a professional. I do and have a Financial Planner for 20+ years for advice only, as I handle all of my own personal affairs.
I made a list a few years back of what I felt I needed to do for personal preparation. I had to sacrifice a lot and it took a lot of strength, but I have accomplished enough over the past 3+ years to feel much safer and secure for the time being anyway.
Sample List:
1. Pay off all debt, and sell whatever you don’t need
2. Stop Smoking and Drinking if you do.
3. Stop Giving Money Away (use it to pay down debt)
4. Make your Own Lunch & Coffee Every Day
5. Stop Feeling like you Need to Pay for your 18+ kids
6. Stop Buying Birthday Gifts to anyone 18+ (Make It)
7. Stop Christmas Cards and Pick Up The Phone
8. Instead of Extended Family Gifts, Donate Together!
9. Go Out to Eat ONLY if you can Pay Cash
10. Invest in CD’s (can’t touch the money) and roll it
You probably see where I am going with this list. I have about 100 items on my list and I have accomplished many of them already. Things like Get a Will, Power of Attorney, Consolidate Debt, etc.
From the above list I have accomplished 2,3,5,6,7,8,9&10 and am working diligently on the balance and others on my list. 2 was the hardest and had to go away to get done, and 5 and 6 had the most blowback, but overcame it and stood my ground.
I Focus on Nature as a Tool to Learn From and Admire, I have also brought (my own) Prayer and God into my life, and I have learned to meditate. I don’t watch the MSM at all, but do dabble in Independent Journalism (aligns more with my thoughts and beliefs). I also stay away from Drama People, and had to Disown some family and friends. I tell you this because it is not an easily done adventure, and has many obstacles, but it can be done!!
Thanks
Stu
Great list Stu.
#2 was indeed the hardest
What’s so hard about making your own lunch & coffee?
(I switched to tea 75%, still love coffee.)
Now I only send Christmas cards to a one digit list.
I’m planning to go to the Tsubaki Grand Shrine of America and get some of the gods back into my life.
Thanks Lisa, and congrats to you on #2!
Lunch I have solved and rarely stop for that old time quick fix to hunger any longer, but Coffee has been the problem. It is really more Caffeine in nature for me. I got hooked on those damn energy drinks but have solved that. I don’t make it at home to avoid it, but still grab one here and there.
Having a higher power humbles a person IMO, and is also good for the Soul! Gives Me something to answer for when Meditating .
Good Luck!
If the Republican’s are smart, they will push for small shutdown, just enough to nudge us into a recession.
Would all but assure Biden loosing the Whitehouse. People won’t remember the Republicans doing it, all they will know is times are tough going into the fall voting season.
1) SPX 1M , 1TD left until Sept 29 : Sept bar is larger than Aug and July bars, on lower vol. Something is wrong. If tomorrow close is under July low the correction
might be deeper.
2) SPX 1W with the cloud : within 2 weeks Senko B WILL lose its Oct lows and move
up. T&K and the cloud might flip.
3) SPX quarterly, 3M : a trigger. The lowest red Vol since 2009.
4) The risk is high.
For recession to happen, in my opinion, you need unemployment to go up. Unemployed people don’t spend money they don’t have.
So why hasn’t unemployment happened? Because millions of people are leaving the workforce. But it is worse than that too because….
Those millions of retired people sign up for social security and get money to spend so that keeps the potential unemployment from happening too.
Add to all this the whole re-shoring and reconfiguration of supply chains and that keeps more people employed. Throw government spending on pet projects on top of all this and that means even less unemployment.
If anything, we are going to have HUGE labor issues moving forward over the next decade causing inflation to spike up with periodic reprieves as “breathers” for the economy. The Fed can’t print people or energy.
I’ve been on the T-bill train for a while now and it keeps printing delicious tendies.
It’s a whole new paradigm, time to update those 1960 economic playbooks and embrace the roaring 2020s.
While higher unemployment is nice for a recession, if you can’t get higher unemployment the next best things are:
1) higher prices for energy
2) higher prices for food
3) higher prices for shelter
Broke people don’t spend money they don’t have.
“Unemployed people don’t spend money they don’t have”
sure they do. Its called unemployment insurance and credit.
The old line, way back, used to be “I can’t be out of money I still have checks left”. Now it’s “keep spending until they cancel my credit card”
Inflation is clearly entrenched at this point. The Fed needs to sh*t or get off the pot.
The two options outlined above being: (1) raise interest rates or (2) raise inflation target.