Saturday, November 5, 2011

Western economy growth rates portend recession


This indicator has been making the rounds.  Recession soon follows when real GDP year-over-year falls below two percent, as it has for the past two quarters.  The indicator has a pretty good track record over the past 60+ years, never having missed signaling an ensuing recession a year or so in advance with no false positives.

And the situation in Europe is similar, with a garnish of extreme political instability thrown on for seasoning:

euro area gdp growth rate

1 comment:

  1. Granted the forecast accuracy of the RGDP-YOY must be acknowledged. But, adding in this week's leading data releases, the TRENDLines Recession Indicator projects a GDP trough of o.6% in February ... en route to a 3.9% business cycle crest in 2014Q4. There are a dozen weeks of troubling economic releases yet to endure, but the phantom ECRI Recession appears to have little merit.

    TRI chart: