Twelve Economic Indicators of a US Recession

Let’s delve into the economic indicators that provide insights into a potential US recession:

1. Gross Domestic Product (GDP):
   • Negative GDP growth over two consecutive quarters is a common rule of thumb for identifying a recession.
   • However, the National Bureau of Economic Research (NBER) defines a recession based on depth, diffusion, and duration of economic decline.
2. Real Personal Income:
   • A decline in real personal income (adjusted for inflation) can signal economic distress.
3. Nonfarm Payroll Employment:
   • Job losses across various sectors impact overall economic health.
4. Household Employment:
   • Employment measured by the household survey provides insights into labor market conditions.
5. Real Personal Consumption Expenditures:
   • A drop in consumer spending affects economic activity.
6. Wholesale-Retail Sales:
   • Adjusted for price changes, these sales reflect consumer demand.
7. Industrial Production:
   • A decrease in industrial output indicates economic slowdown.
8. Treasury Yield Curve:
   • An inverted yield curve (short-term yields higher than long-term yields) may signal recession.
9. Unemployment Rate:
   • Rising unemployment can be indicative of economic contraction.
10. Durable Goods Orders:
    • A decline in orders for long-lasting goods reflects reduced business investment.
11. Stock Market Performance:
    • Bear markets often coincide with recessions.
12. Housing Market Activity:
    • Home sales, construction, and housing prices impact economic stability.

Remember, while no single indicator guarantees a recession, monitoring a combination of these factors provides a more comprehensive view of the economy’s health. Vigilance and analysis are crucial to navigate economic cycles.

For a deeper understanding, explore the St. Louis Fed article on U.S. recession indicators¹