Year on year, business growth is still growing. Below are the Lewis-Mertens-Stock (New York Fed) WEI, the Woloszko (OECD) Weekly Tracker and the Baumeister-Leiva-Leon-Sims Weekly Economic Conditions Index for the United States, for data up to a few days ago (September 17):
Figure 1: Lewis-Mertens-Stock (NY Fed) Weekly Economic Index (blue), Woloszko (OECD) Weekly Tracker (tan), Baumeister-Leiva-Leon-Sims Weekly Economic Conditions Index for US plus 2% trend (green) Source: NY Fed Going through Fred, OECD, WECIand the author’s calculations.
The WEI dipped from the previous week, falling to 1.8% from 2.8%, while the Weekly Tracker continued to rise. It is fair to say that there is some divergence, which is not surprising given the large differences in methodologies. The WEI relies on correlations in ten series available on a weekly basis (eg unemployment claims, fuel sales, retail sales). The Weekly Tracker is a “big data” approach that uses Google Trends and machine learning to track GDP.
The WEI reading for the week ending 9/17 of 1.8 is interpretable as quarterly growth of 1.8% year-over-year if the 1.8% reading were to persist for an entire quarter. The OECD Weekly Tracker reading of 3.8 is interpretable as an annual growth rate of 3.8% for the year ending 9/17. The Baumeister et al. a reading of 1.1% is interpreted as a growth rate 1.1% above the long-term trend growth rate. Average US GDP growth over the period 2000-19 is around 2%, implying a growth rate of 3.1% for the year ending September 17th.
Given that these are year-over-year growth rates, it is possible that we were in a recession in the first half, because an observer proposed a month ago, but it (still) seems unlikely.