New Data: Stagflation --> Recession

Are we closer to a cycle stage rotation?

A few days ago in “The Economic Cycle. Where are we?” I described the current state of the economy and provided a framework for monitoring its status moving forward.

Today, more data on economic growth was released, leading to an update in the Atlanta Fed’s GDPNow indicator. The model is now forecasting real GDP growth of -1.5%.

From my economic cycle identification framework:

If growth comes in below 0%, it will represent 2 consecutive quarters of negative real GDP growth — which is typically associated with recession.

Christophe Barraud🛢🐳 @C_Barraud

🇺🇸 The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2022 is -1.5 percent on July 15, down from -1.2 percent on July 8. *Link: bit.ly/3cdULeW

Forward Guidance @ForwardGuidance

Atlanta Fed is tracking for -1.5% GDP growth for the 2nd quarter. With 13 days before GDP data is released (July 28), it is very very likely (>90%) that real GDP will have shrank for two consecutive quarters - a sign that the U.S. economy is an unofficial recession.

I also saw some interesting forecast data for the CPI (consumer price index) today. The data suggest we are at or very near a peak in the inflation rate.

From my economic cycle identification framework:

Michael A. Arouet @MichaelAArouet

Fingers crossed 👇 Chart @PatrickKrizan

Michael A. Arouet @MichaelAArouet

Just saying… ht @topdowncharts

Michael A. Arouet @MichaelAArouet

And number 3 👇 Ht @LarryAdamRJ

This is the type of leading data an analyst expects to see in a stagflation / late-cycle environment that is rotating toward recession.

Over the next day or two, I’ll post a full update of my economic cycle framework and walk through the indicators I analyze in each step of the process.

— Brant

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