Tuesday, October 11, 2022

Charts Indicating Economic Weakness – October 2022

Throughout this site there are many discussions of economic indicators.  This post is the latest in a series of posts indicating facets of U.S. economic weakness or a notably low growth rate.

The level and trend of economic growth is especially notable at this time. As seen in various estimates, the probability of recession has grown significantly and the second consecutive quarter of Real GDP contraction was (first) reported on July 28.

As seen in the July 2022 Wall Street Journal Economic Forecast Survey the consensus (average estimate) among various economists is for .71% GDP growth in 2022, 1.14% GDP growth in 2023, and 2.05% GDP growth in 2024.

Charts Indicating U.S. Economic Weakness

Below are a small sampling of charts that depict weak growth or contraction, and a brief comment for each:

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The Yield Curve (T10Y2Y)

Many people believe that the Yield Curve is a leading economic indicator for the United States economy.

On March 1, 2010, I wrote a post on the issue, titled “The Yield Curve As A Leading Economic Indicator.”

While I continue to have the stated reservations regarding the “Yield Curve” as an indicator, I do believe that it should be monitored.

The U.S. Yield Curve (one proxy seen below) has turned negative and is (all things considered) notably low when viewed from a long-term perspective. Below is the spread between the 10-Year Treasury Constant Maturity and the 2-Year Treasury Constant Maturity from June 1976 through the October 7, 2022 update, showing a value of -.41% [10-Year Treasury Yield (FRED DGS10) of 3.83% as of the October 7 update, 2-Year Treasury Yield (FRED DGS2) of 4.23% as of the October 7 update]:

T10Y2Y -.41 Percent as of the October 7, 2022 update

source: Federal Reserve Bank of St. Louis, 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity [T10Y2Y], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed October 10, 2022: https://fred.stlouisfed.org/series/T10Y2Y

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Rail Freight Carloads (RAILFRTCARLOADSD11)

“Rail Freight Carloads” continues to show a generally downward progression from a longer-term perspective.  Shown below is a chart with data through June 2022 (last value of 1,014,537), last updated September 7, 2022:

Rail Freight Carloads

Here is the same measure on a “Percent Change From Year Ago” basis, with value -1.3%:

Rail Freight Carloads Percent Change From Year Ago

source:  U.S. Bureau of Transportation Statistics, Rail Freight Carloads [RAILFRTCARLOADSD11], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed October 10, 2022: https://fred.stlouisfed.org/series/RAILFRTCARLOADSD11

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Average Weekly Overtime Hours of Production and Nonsupervisory Employees: Manufacturing (AWOTMAN)

Various U.S. manufacturing measures continue to indicate growth. However, overtime hours for manufacturing is somewhat subdued by recent-era economic expansion standards and the measure on a Percent Change From Year Ago level has recently gone negative.

Shown below is the “Average Weekly Overtime Hours of Production and Nonsupervisory Employees: Manufacturing” measure (with last value of 3.9 hours through September) last updated October 7, 2022:

AWOTMAN

Below is this measure displayed on a “Percent Change From Year Ago” basis with value -4.9%:

source: U.S. Bureau of Labor Statistics, Average Weekly Overtime Hours of Production and Nonsupervisory Employees: Manufacturing [AWOTMAN], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed October 10, 2022: https://fred.stlouisfed.org/series/AWOTMAN

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Job Openings (JTSJOL)

Job openings (Job Openings: Total Nonfarm [JTSJOL]), although still at a (very) high level, have recently declined significantly. This Job Openings measure had a value of 10053 (Thousands) through August 2022, as of the October 4, 2022 update, as shown below:

Job Openings, Total Nonfarm

Shown below is this measure displayed on a “Percent Change From Year Ago” basis with value -5.4%:

Job Openings: Total Nonfarm Percent Change From Year Ago

source: U.S. Bureau of Labor Statistics, Job Openings: Total Nonfarm [JTSJOL], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed October 10, 2022: https://fred.stlouisfed.org/series/JTSJOL

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Other Indicators

As mentioned previously, many other indicators discussed on this site indicate weak economic growth or economic contraction, if not outright (gravely) problematical economic conditions.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 3612.39 as this post is written

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