What Recession?


Rising rates, falling savings, increased deficits, dubious GDP: Ever since the yield curve inverted and warnings of “imminent recession” filled the air, the Philly Fed’s map of State Coincident Indexes has provided a good real-time snapshot of the state of the economy. Friday’s release might have snuck by, but its filled with upside surprises that are worth looking at.

The overview is simple: Over the past 3 months, the coincident indexes for all 50 states indexes have increased (Diffusion index = 100). Last month (May 2023), indexes increased in 47 of 50 states, were flat in 2 states (Minnesota and Rhode Island), and fell in just 1 (Wisconsin). Other states that were softish include New Jersey, Arkansas, and Kentucky.

Ned Davis Research crunches the state coincident indexes into a probability chart that shows but a 1% chance we are currently in a recession. This is not a prediction, but rather, a reading of the coincident indexes as a current recession indicator.

NDR Recession Probability Model: 1% chance of a recession currently

NDR via Ryan Detrick

Side note
: The yield curve has been inverted for what feels like forever. Note that the 10 Year minus the 3-Month Treasuries — the recession forecast indicator created by Duke Fuqua school of business professor Harvey Campbell inverted in 2019, then again briefly in 2020, then went deep once the FOMC began raising rates in 2022:


Despite its near-perfect history of recession forecasting, perhaps the yield curve inversion is less prophetic when coming off of a decade of Fed Funds at zero. Regardless, it is extremely difficult to objectively look at the current data and state we are in a recession currently or will be anytime soon.

The wildcard? How much the FOMC overtightens rates and causes a recession through their too fast/too many/too high future rate hikes…



Are We in a Recession? (No) (June 1, 2022)

What Data Makes NBER Recession Calls? (September 1, 2022)

The Post-Normal Economy (January 7, 2022)

10 Bad Takes On This Market (May 19, 2023)


State Coincident Indexes Current Report (PDF)
Federal Reserve Bank of Philadelphia, May 2023


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