When everyone was speculating whether the US economy would fall into recession and when would it fall into recession, Sister Mu said that the recession had begun yesterday. Deutsche Bank analyst Jim Reid gave the most ideal leading indicator for predicting the US economy to fall into recession in his latest report - the number of people who continue to apply for unemployment benefits (hereinafter referred to as "number of people who renew unemployment benefits").
Since the data was found in 1960, the number of people who renewed unemployment benefits in the United States can accurately determine the economy is in recession and send out signals about two months in advance, which is very accurate and timely. The method of using this indicator is to start to count down about two months of the recession when the number of people who request unemployment benefits rose by more than 11.5% from the lowest level of the previous year.
In the current cycle, the low point of the number of people who continue to request unemployment benefits is 1.306 million hit on May 20, 2022. So far, it has risen by less than 1%, at 1.315 million. Calculated at an increase of 11.5%, the data needs to reach at least 1.456 million before the recession countdown begins.
Next week is a graph since 1966. The yellow line is the trough of the number of people who request unemployment benefits, and the gray area is the economy entering a recession.
At present, the number of people applying for unemployment benefits in the United States for the first time (number of those who filed for unemployment benefits for the first time) has risen from a low of 166,000 in March to 229,000 last week. Reid wrote that over time, the correlation between the two series (the number of first-time unemployment benefits vs. the number of renewed unemployment benefits) is very good, so if renewed unemployment benefits keep up with the pace of first-time unemployment, it is enough to confirm that the U.S. recession is imminent. However, the relevant data have been seasonally adjusted, and the non-seasonally adjusted data is still hovering at the bottom, so Deutsche Bank believes that there is no need to interpret the rise of the data for the time being.
Financial and financial blog Zerohedge commented that in any case, according to Reid, is worth paying attention to in the foreseeable future when it releases data on the number of people who renewed unemployment claims at 8:30 a.m. Eastern Time on Thursday.
Deutsche Bank Asset Allocation Team published an article last week, telling us what it is from the short-term, medium-term and long-term U.S. recession indicators. To sum up, most leading indicators that were 6-14 months ahead of the recession are warnings; most leading indicators that were 1-5 months ahead of the recession give vague signals; most indicators that were experiencing or later have not yet given signals.
Federal Chairman Powell made a speech on Wednesday, reaffirming his long-standing view that the U.S. economy is strong enough to deal with austerity monetary policy, households and businesses have a sound financial situation and the labor market is "very strong" and should avoid recession. But he also admitted that the task of achieving a "soft landing" in the context of a sudden conflict between Russia and Ukraine has "apparently become" more challenging in recent months, "there is no guarantee of a successful soft landing, and the path to achieving a soft landing has become narrower." He said the longer high inflation lasts, the road to a “soft landing” will become increasingly difficult, as it increases the likelihood that public inflation expectations will run out of control.
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