Refinements and Adjustments
October 3, 2025: The economic recovery from the post-Covid shutdown has differed from the recoveries usually seen after normal, business-cycle recessions. Some economic indicators have seen unusual spikes or drops in activity. This has been especially true for four indicators: existing home sales, nonfarm job openings, nonfarm hires, and total vehicle sales. As a result, unusually high spiked data since the Covid shutdown have been removed for these four measures. In addition, trend lines starting from the pre-Covid economy have been used to better see where these indicators would have likely peaked if there had not been a Covid shutdown of the economy. The overall effect on the MoC, WMoC, and LD has been relatively modest, with each moving roughly one percent to one and a half percent higher above the baseline.
April 26, 2024: The Weighted Mean of Coordinates was added to the BaR. The WMoC doubles the weight of nonfinancial corporate profits, unemployment claims, and the STLFSI. Over the past two years, these three indicators have remained strikingly positive while other indicators have moved near or below the baseline. This indicates that as profits stay high and financial stress stays low, a recession is unlikely despite the decline in other factors. The WMoC is being tested to see if it serves as a better recession indicator.
November 11, 2022: The St. Louis Fed change the methodology used to calculate the STLFSI. As stated on its blog: "Our analysis showed that instead of using the 90-day backward-looking SOFR rate, we should have used the 90-day forward-looking SOFR rate." The incorporation of the new STLFSI data points moved the STLFSI point on the BaR grid closer to the baseline.
April 1 2022: The Chicago Fed National Activity Index (CFNAI) has been given a weight that is one-fourth of other indicators. Since the COVID economic shutdown, the CFNAI has been prone to large swings, causing it to overly influence the MoC.
March 26, 2022: In the % From Baseline table, on the smaller % MoC From Baseline Prior to Typical Recession table, the MoC values prior to the 1990 - 1991 recession were added. The average is now weighted, with the most recent recessions being more heavily weighted.
March 4, 2022 upgrade: The OECD business confidence index has been added to the BaR replacing the ISM manufacturing and services index. The OECD business confidence is preferred because it has the behavior of a leading indicator and it is sensitive to the mini-cycles that occur during all business cycle expansions. Tracking mini-cycles is especially important for investors as the stock market historically declines during the downward period of a mini-cycle. There are often two or three notable mini-cycles during a period of economic expansion. In addition, the yield curve spread has been changed from the 10-year Treasury note minus 3-month Treasury bill to the 10-year Treasury note minus 2-year Treasury note. Two-year notes are influence largely by market forces rather than Fed manipulation, providing a better indicator of economic trends.
2022 baseline resets: For some indicators, baselines differ from one business cycle to another. As more data is collected during an expansion, their baselines are adjusted to better estimate where the indicator is likely to be at the start of the next recession. Baselines have been reset for private building permits and weekly unemployment claims.
Temporary employment data revision: At the beginning of February 2022, the Bureau of Labor Statistics adjusted employment data. Temporary employment numbers were increased, placing this indicator at a higher position above the baseline.