Do those so-called US recession indicators actually mean anything? | Gene Marks
As someone who keeps a close eye on the economy, I often bump into those strange metrics that people like to write about that, supposedly, unlock the secret of whether or not a recession is looming.Given what’s going on, it’s no surprise that they are back again.Just last week Bloomberg reported a cut in spending at hair stylists.There’s the “lipstick index” – in tough economic times, women load up on lipstick instead of spending their dwindling funds on bigger-ticket items.Former Fed chair Alan Greenspan liked to follow men’s underwear sales because hey, when times are tough, we guys are not willing to buy new shorts.
There’s little empirical evidence that any of these metrics mean anything,And it’s next to impossible to gather accurate data to even measure these things,Are you getting a report from the men’s underwear industry? No, I didn’t think so,The media likes to advertise other well-known metrics like consumer sentiment, unemployment, and gross domestic product as indicators of a healthy or potentially sick economy,Economists like to look at bond yields, “beige book” data from the Federal Reserve, commodity prices, manufacturing activity, shipping indexes and other esoteric measurements to gauge where an economy is heading.
But none of these are reliable predictors either.They oftentimes contradict each other or fail to reveal underlying problems (a housing collapse? junk bonds? tulips?) that are the trigger for a recession.The truth is that no one really knows.Economists and academics and pundits have been historically wrong too many times.Some like to manufacture needless panic so that they can get a spot on CNBC.
Will it be tariffs this time? Higher inflation? An AI bubble? Your guess – their guess – is as good as any,Also, I don’t like to rely too heavily on government data – it’s based on surveys and initial releases are oftentimes significantly revised well after the fact,I’m also not a big fan of data from trade associations,They also gather their numbers through polling and tend to skew towards a rosier view of how their industry is doing,Small business surveys are the worst – I get a dozen a month, all from organizations with their own agendas (“98% of small businesses say AI is critical for them,” reports a tech company that’s introducing new AI features in its product; “80% of business owners support President Trump’s policies,” says a right-leaning commerce association).
These aren’t actual reports,But they’re not far off,Is a recession coming? Here’s my advice: go to the source,An economy is run on three key components: consumers, capital and labor,And although no one can predict the future, the best place to get a handle on where things are going is to look at actual data from the companies that are driving these three components: retailers, banks and payroll companies.
For example, for the most recent quarter Walmart reported “solid momentum”, Amazon had a 10% net increase in sales and Home Depot’s CEO said: “Our fourth quarter results exceeded our expectations,” So far, so good,But I’ll be looking closely at the next round of earnings releases in May,What about banks? On 15 April, Citibank said it has a “strong quarter”, JPMorgan said its quarter also showed “strong underlying business and financial results” and that its “fortress balance sheet enables the firm to be a pillar of strength, particularly during volatile or challenging times”,Jon Snow would love that.
Wells Fargo said it had “solid results”,Capital seems OK,Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionAnd so does the employment picture,John Gibson, the CEO of Paychex, said this month, as part of the company’s release of its Small Business Employment Watch, that “according to our most recent data, the small business labor market is fundamentally healthy and showing no current signs of a recession”,Nela Richardson, the chief economist at ADP, said that “despite policy uncertainty and downbeat consumers, the bottom line is this: the March topline number was a good one for the economy and employers of all sizes, if not necessarily all sectors”.
These are not surveys, polls or extrapolations.It’s actual data that these companies are using to run their businesses and report to their shareholders.Their CEOs are held back via SEC rules from making forward-looking statements.But you can read the tea leaves.If there are cracks forming, you’ll know it here.
And if you’re getting this data as soon as it’s released – which is also not hard to find – you’ll be on top of how the economy is doing and where it’s going,Quoting those funny metrics or raising concerns over the latest government data may be a good way to start a conversation,But it’s not a great way to predict a recession,
‘We just go to the park’: making the most of Easter in a child-poverty hotspot
In Manningham in Bradford 72% of children live below the poverty line. The national average is 22% ‘The whole policy is wrong’: rebellion among Labour MPs grows over £5bn benefits cutWhile some British children will be going on holiday, playing with high-end games consoles or spending a week at a holiday club, for many children the Easter break is somewhat different.Manningham in Bradford has the second highest rate of child poverty in the UK, with nearly three-quarters, 72%, of children living below the poverty line, according to the latest data from the Department for Work and Pensions, released earlier this month. This compares with a national average of 22%.Zayn, Mahmood and Abdi, 13-year-olds who go to the same school, were hanging out on a Manningham housing estate after playing football
‘The whole policy is wrong’: rebellion among Labour MPs grows over £5bn benefits cut
Labour MPs opposed to the government’s massive £5bn of benefit cuts say they will refuse to support legislation to implement them, even if more money is offered by ministers to alleviate child poverty in an attempt to win them over.Legislation will be introduced to the House of Commons in early June to allow the cuts to come into force. They will include tightening the criteria for personal independence payments (Pip) for people with disabilities, to limit the number of people who can claim it. Under the changes, people who are not able to wash the lower half of their body, for example, will no longer be able to claim Pip unless they have another limiting condition.A major rebellion appears to be hardening on the Labour benches rather than subsiding, despite frantic efforts by whips and government ministers to talk MPs round
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Microplastics found in human ovary follicular fluid for the first time
Microplastics have been found for the first time in human ovary follicular fluid, raising a new round of questions about the ubiquitous and toxic substances’ potential impact on women’s fertility.The new peer-reviewed research published in Ecotoxicology and Environmental Safety checked for microplastics in the follicular fluid of 18 women undergoing assisted reproductive treatment at a fertility clinic in Salerno, Italy, and detected them in 14.Follicular fluid provides essential nutrients and biochemical signals for developing eggs. Contaminating that process with bits of plastic quite likely has implications for fertility, hormonal balance and overall reproductive health, the authors wrote.The findings represent a major step toward figuring out how and why microplastics impact women’s reproductive health, but are also “very alarming”, Luigi Montano, a researcher at the University of Rome and study lead author, said
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