SMU Recession Monitor: Indicators Remain Positive

Indicators of economic activity through Jan. 10 data do not predict an imminent U.S. recession.

In this report, we have identified eight indicators that have some predictive ability about the short-term likelihood of a recession (definition below). Viewed individually, these don’t offer much insight into the future, but viewed collectively they give subscribers a better idea of present and future business activity. While one indicator may fail, the probability of a majority of these sectors providing a false signal is significantly diminished. Our recommendation is that readers examine Figures 3-11 and look for signs of a turnover in recent results. If the majority is heading south, we should be concerned. Since World War II, most recessions have been preceded by an overheated economy as indicated by low unemployment, tighter monetary policy and rising long-term interest rates.