RCF Recession Scorecard December 2019

At this time, 12 of our 27 measures are suggesting continued growth, while 6 are pointing to a recession and 9 are providing mixed signals. This represents an improvement from our September scorecard when 10 measures were pointing to growth and 8 were pointing toward a recession. The improvements have mostly come from the financial sector. 10-year Treasury rates have recently been rising, causing the yield curve to steepen somewhat. The stock and housing markets have also done well of late. However, new weaknesses were found in the third-quarter slowdown in consumer spending and the surprising drop in labor productivity, the first such decline since 2015. Click here for pdf version: RCF Recession Scorecard December 2019

Nevertheless, the job market continues to be free of recession indicators. Payroll employment continues to rise and unemployment claims remain low, as does the unemployment rate. Of some concern is that real GDP growth has slowed to about a 2.0% annual rate over the past two quarters despite boosts from fiscal policy (near $1 trillion deficit) and monetary policy (3 quarter-point rate cuts in the past 4 months).

And here is an interesting statistic. In 2019, we saw a widening budget deficit and cuts to the Fed funds rate. This combination has occurred three other times in the past 30 years (1990 – 1992, 2001 – 2003, and 2008 – 2009). Each of those three previous periods occurred during recessions. So while the economy continues to avert a downtown, fiscal and monetary policies are in recessionary modes.

For more information, contact Mr. Peter Bernstein, RCF Vice President, at 312-431-1540 ext. 1515, pbernstein@rcfecon.com.