Out of curiosity, I peruse the net to see who continues to be saying a recession is coming (with an open thoughts). This tweet suggests retail gross sales are the indicator de jour:
Supply: Alex Joosten (2024).
Fairly convincing, for the previous 3 recessions. Nevertheless, the post-pandemic growth in consumption and retail spending is sort of exceptional, so I assumed it is likely to be helpful to contemplate an extended span of information, utilizing inflation adjusted retail gross sales. That is the image I obtained, for 1947-2024M04.
Determine 1: Actual retail gross sales (FRED collection RSALES) (tan), and actual retail and meals service gross sales (FRED collection RSAFS) (blue), in mn.1982-84$, deflated utilizing FRED collection CPIAUCSL. NBER outlined peak-to-trough recession dates shaded grey. Supply: FRED, NBER.
It’s definitely true that retail gross sales flatten and even decline in some circumstances earlier than a recession (as outlined by the NBER). However, every of the earlier circumstances, retail gross sales was deviating from a pre-recession pattern. Is that this true on this case? With out figuring out if an incipient recession is simply upon us, I can’t reply that. Nevertheless, I can consider whether or not retail and meals gross sales, deflated by the CPI, was deviating from the 2016-19 (stochastic) pattern.
Determine 2: Actual retail and meals service gross sales (FRED collection RSAFS) (blue), in mn.1982-84$, deflated utilizing FRED collection CPIAUCSL. NBER outlined peak-to-trough recession dates shaded grey. Supply: FRED, NBER.
So, by one metric, we must be fearful. By one other (deviation from pattern), perhaps not.
