In the eyes of many observers, the US economy does not seem to have entered a recession yet, and it may even be able to avoid this fate. For example, Treasury Secretary Yellen said in a speech last weekend: the US has basically achieved a soft landing.

However, a series of warning signals from well-known economic indicators continue to sound the alarm. The following section has compiled fifteen indicators related to recession, suggesting that you can observe and analyze these indicators from multiple perspectives to gain a more comprehensive understanding of the economic situation.

1. Inverted U.S. Treasury Yield Curve

Since July 2022, the 10-year bond yield has finally exceeded the 2-year bond yield, which means that the longest inverted record in history has finally been lifted after 793 days.

However, the United States has experienced five economic recessions from the 1980s to the present, and there have been instances of yield curve inversion before, which inevitably makes the market begin to worry whether history will repeat itself this time, such as the AI bubble burst.

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2. Leading Economic Index of the United States Business Advisory Council

The Conference Board Leading Economic Index (LEI) for the United States covers several areas, including manufacturing activity, confidence indices, and consumer confidence. Despite the index showing signs of recovery, it remains at an alarmingly low level, indicating potential risks of economic slowdown in 2022 and 2023.

3. Non-farm Employment Data

In the past few economic downturns, this indicator usually turns negative in monthly increments, followed by a rapid rise in the unemployment rate. Although the current unemployment rate remains relatively low, if non-farm employment declines significantly, close attention should be paid to changes in the unemployment rate.

Fourth, Sam's Rule Decline Indicator

This indicator, proposed by economist Sam of the Federal Reserve, indicates that when the three-month moving average of the unemployment rate exceeds the previous year's low point by 0.5%, it indicates an economic recession.

Although the index has reached 0.53% at present, Sam previously believed that this time might not necessarily enter a recession, but also expressed that the situation has become more serious.

5. Consumer Confidence Index

The consumer confidence index reflects consumers' outlook on the economy, and a low consumer confidence typically signals a decrease in consumer spending, thereby impacting the rise. As consumer spending accounts for 70% of the US GDP, the data released by the Economic Advisory Committee and the University of Michigan is highly indicative.

Six, Manufacturing PMI (Purchasing Managers' Index)

The PMI index is an important indicator of the health of the manufacturing industry. A value below 50 usually indicates an economic slowdown. The Institute for Supply Management conducts monthly surveys covering multiple indicators such as new orders, production, and employment, making its assessment of the economic situation crucial.

7. Personal Consumption Expenditures (PCE)

PCE is an important component of the US economy, and its decline usually indicates the risk of an economic recession. As consumer spending decreases, the economy will be suppressed.

Eight, Capital Expenditure

A decrease in investment in equipment and construction by enterprises is usually an early signal of economic slowdown, and the estimates of future capital expenditure by major central banks can provide clues about corporate investment trends.

It is observed that the future capital expenditures of various central banks are at a high point, indicating that enterprises still have production capacity. However, when capital expenditures decline and client inventories are replenished, attention should be paid to the valuation correction of S&P 500 manufacturing-related zones.

9. Bank Loan Growth Rate

The reduction in bank loans may indicate a decrease in demand from businesses and consumers, which will directly affect economic activities. The change in credit cycles is often a precursor to an economic recession.

The economy has entered the late stage of the upturn, and the hidden worries of overcapacity and the pressure of policy tightening are beginning to affect enterprises. Even though they see a rebound in end demand, companies are turning to a more conservative attitude towards investment spending such as expansion, until the credit cycle eventually enters a downturn.

Ten, Coborn Index

This indicator is based on the sales volume of heavy-duty trucks, which is related to forward-looking investment on the enterprise side, and can effectively predict economic trends. If the indicator shows a decline, it may indicate a slowdown in economic activity.

When the economic conditions deteriorate, companies will be the first to feel it and reduce expenses and purchases. Therefore, in the past five cycles, this index has led the U.S. economy into recession, and when the economy improves, the purchase of trucks will rebound in sync.

Over the past 40 years, the Ko Bowen Index has been ahead of the S&P 500 by more than 1 year, making it a very unique leading indicator.

Eleven, Atlanta Federal Reserve Bank GDP Forecast Model (GDPNow)

The model combines multiple economic data to predict a rise in US GDP. If the rise predicted by the GDPNow model slows down, it may indicate the risk of an economic recession.

Twelve, OECD U.S. Composite Leading Indicator

An index below 100 usually indicates that economic activity is below potential levels, which may imply the risk of an economic recession. This indicator can reflect the overall trend of the global economy.

OECD Composite Leading Indicators for the United States

Thirteen, Federal Reserve Bank of Chicago National Activity Index (CFNAI)

CFNAI is calculated based on 85 different monthly indicators, and when it stays negative for several consecutive months, it may indicate the risk of an economic recession.

Chicago Federal Reserve Bank National Activity Index (CFNAI)

Fourteen, Philadelphia Federal Reserve Bank SPF Decline Index

This indicator is based on surveys of professional forecasters, predicting the probability of future GDP negative growth. If this probability significantly rises, it may indicate an increased risk of economic recession.

Philadelphia Federal Reserve Bank SPF Recession Indicator

Fifteen, Single-Family Home Market Index (HMI) and Building Permit Data

These indicators are directly related to the real estate market. If the index drops, it may reflect a weakening of consumer confidence and the possibility of future economic recession.

Single-family new home market index (HMI)

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