Weekly indicators from Lewis-Mertens-Inventory (NY Fed) Weekly Financial Indicators, and Baumeister, Leiva-Leon and Sims WECI and Woloszko (OECD) Weekly Tracker via 2/11/2023 have been launched right now.
Determine 1: Lewis-Mertens-Inventory Weekly Financial Index (blue), OECD Weekly Tracker (tan), Baumeister-Leiva-Leon-Sims Weekly Financial Situations Index for US plus 2% development (inexperienced), and IHS Markit month-to-month GDP (blue bars). Supply: NY Fed by way of FRED, OECD, WECI, and creator’s calculations.
There’s been a pointy rebound within the Weekly Tracker, which had dipped into destructive for the week ending 11/26, now exceeding the WEI (0.9%) and WECI+2% (2.0%). The WEI studying for the week ending 2/11 of 0.9% is interpretable as a y/y quarter development of 0.9% if the 0.9% studying have been to persist for a whole quarter.The Baumeister et al. studying of -0.03% is interpreted as a -0.03% development price in extra of long run development development price. Common development of US GDP over the 2000-19 interval is about 2%, so this suggests a 1.97% development price for the yr ending 2/11. The OECD Weekly Tracker studying of three.4% is interpretable as a y/y development price of three.4% for yr ending 2/11.
The OECD Weekly Tracker continues to rise, at the same time as the opposite two sequence slowly decline. It’s necessary to recollect the WEI depends on correlations in ten sequence out there on the weekly frequency (e.g., unemployment claims, gas gross sales, retail gross sales), whereas the WECI depends on a combined frequency dynamic issue mannequin. The Weekly Tracker — at 1.1% — is a “massive information” method that makes use of Google Tendencies and machine studying to trace GDP. As such, it doesn’t depend on precise financial indices per se.
Within the 2020 recession, the “Weekly Tracker” confirmed a extra rapid decline than the measures based mostly on precise financial indices.
Determine 2: Lewis-Mertens-Inventory Weekly Financial Index (blue), OECD Weekly Tracker (tan), Baumeister-Leiva-Leon-Sims Weekly Financial Situations Index for US plus 2% development (inexperienced). NBER outlined recession dates shaded grey. Supply: NY Fed by way of FRED, OECD, WECI, NBER, and creator’s calculations.
For me, the dynamic issue method is extra acquainted, so I believe for the second I’m giving extra credence to the WEI and WECI (that being stated, the Weekly Tracker higher matches IHS Markit/S&P International month-to-month GDP y/y development, as proven on this put up).