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"Insensibly one begins to twist facts to suit theories, instead of theories to suit facts."        — Sherlock Holmes, A Scandal in Bohemia
Economic Indicator Charts with Baselines

The BaR Analysis Grid© uses economic indicators that correlate strongly with the business cycle and show a consistent pattern of decline prior to recessions. Indicators can be divided into two groups: static and dynamic. Static indicators, like the Chicago Fed National Activity Index and the St. Louis Fed Financial Stress Index, have a consistent recession signal range, resulting in baselines that are consistent from business cycle to business cycle. Other indicators are dynamic, meaning that the indicator values and the recession start points change with each business cycle.

Beginning January 2018, the recession baselines for dynamic economic indicators were changed. The baseline is calculated using two measures. The first is the relative difference between the average value for the indicator during a business cycle and the recession start point. The second is the relative difference between the peak indicator value during a business cycle and the recession start point. The charts shown below are a snapshot taken in January 2018. Since that time, several of the dynamic baselines have shifted slightly due to the peak and/or average values changing.
 
Building Permits
Dynamic baseline; leading indicator
Building Permits 1 18
 
Chicago Fed National Activity Index
 Static baseline
CFNAI 1 18

Consumer Sentiment
 Dynamic baseline; leading indicator
 Consumer Sentiment 1 18

Real Nonfinancial Corporate Profits
 Dynamic baseline
 Corp Profits 1 18
 
Credit Managers' Index (National Association of Credit Managers)
Static baseline
CMI 1 18

Existing Home Sales (National Association of Realtors)
Dynamic baseline
Existing Home Sales 1 18

Industrial Production and Capacity Utilization
Dynamic baseline
CU and IP 1 18

ISM Manufacturing
Static baseline
ISM M 1 18

ISM Nonmanufacturing
Static baseline
ISM N 1 18

Job Openings and Hires
Dynamic baseline; job openings is a leading indicator
JOLTS 1 18 

Real Retail Sales Per Capita
Dynamic baseline
Retail Sales 1 18 
 
Small Business Optimism (National Federation of Independent Business)
Dynamic baseline; leading indicator
Small Biz 1 18

St. Louis Fed Financial Stress Index, Monthly Average
Static baseline; leading indicator
STLFSI 1 18

Temporary Employment
Dynamic baseline; leading indicator
Temp Employment 1 18

Weekly Unemployment Claims, Monthly Average
Dynamic baseline; leading indicator
Unemployment claims 1 18

Vehicle Sales
Dynamic baseline
Vehicles 1 18

Yield Curve Spread, Monthly Average (10-year Treasury notes minus 3-month Treasury bills)


Note: The yield cure spread is pushed forward 12 months when plotted on the BaR Analysis Grid. Research by the Cleveland Fed has determined that the yield curve forecasts economic growth approximately one year in advance. Go here to see the Cleveland Fed's yield curve spread forecast. However, the 12 months is an average and the actual time forecast differs for each business cycle.

Yield Curve 1 18
 

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