Consumption flat, at expectations. We now have the following picture of key indicators followed by the NBER’s Business Cycle Dating Committee.
Figure 1: Nonfarm payroll employment, NFP (dark blue), Bloomberg consensus (blue +), civilian employment (orange), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), consumption in Ch.2012$ (light blue), and monthly GDP in Ch.2012$ (pink), GDP (blue bars), all log normalized to 2021M11=0. Q3 Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (12/1/2022 release), and author’s calculations.
Note that nonfarm payroll consumption rose throughout H1, while personal income excluding current transfers fell. NFP and civilian employment trends throughout H1 do not fit well the recession narrative. However, there has been some discussion of whether nonfarm payroll employment series is correctly measuring growth. I show in Figure 2 cumulative growth rates since 2021M11 for alternative series.
Figure 2: Nonfarm payroll employment, NFP (dark blue), preliminary benchmrked NFP (pink), civilian employment adjusted to NFP concept (orange), private NFP reported by ADP (light green), total covered employment in Quarterly Census of Employment and Wages (dark red), all log normalized to 2021M11=0. QCEW employment seasonally adjusted by author using Census X-11 after X-13 log transformation. Source: BLS, Federal Reserve, BEA, via FRED, and author’s calculations.
Notice that taking into account taxation/regulatory data, the preliminary benchmark revisions for March 2022 implies a higher trajectory for nonfarm payroll employment. I show this as the pink line (see discussion here).
Given the historical correlations, it makes more sense to put weight on the establishment series than the household series. The fact that the ADP series tracks the BLS NFP series buttresses the argument that employment is actually rising throughout H1.
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