Philly Fed Flashes a Recession Warning
Nice catch here by Pedro da Costa at Reuters. He highlights a little followed indicator that is flashing a warning sign (comments via RBC):
“Here’s another indicator flashing red. The three-month trend for the Philly coincident index (which captures state employment and wage metrics) fell to a fresh cycle low of +24 in August – it was +80 just three months ago.
A reading this low historically bodes ill for future economic activity. Looking back at the last five downturns, this index averaged +41 three months prior to the official start of the recession. We have decidedly crossed that threshold.”
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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5 Comments
That looks like one bad @$$ indicator, Cullen. It keeps getting worse.
this indicator is highly susceptible to revisions:
ttp://www.philadelphiafed.org/research … -index.pdf
the research (apr 08) used the numbers then to show that there was no recession, 4 months into it. i;m not saying that now is the opposite, especially with downward revision to july, but one needs to be aware. it does highlight ECRI’s stance that recessions are blurred in real time.
Cullen are you slightly bullish or more neutral at this point? Railroads still positive I see.
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Does anyone know what’s going on?? 50% are positive, other half down.
Only ones making any money are insiders……….