Top 6 Economic Indicators

Below are the FRED graphs of the Top 6 Economic Indicators that we have identified as ‘the best’ out of a total of 66 individual economic indicators that we track. I also created a FRED Dashboard if you’d like to bookmark that for future use. These graphs are updated automatically. There are some data manipulations that are required to generate the signals we use for recession tracking that are unable to be done in FRED. Those are highlighted below.

  1. Civilian Unemployment Rate: we track the UER with respect to its 12 month simple moving average. The trigger is the UER crossing above or below it’s 12 month SMA. This is considered a leading indicator of a business cycle peak.

2. Real Retail and Food Service Sales: we track the year over year change with a cross below zero triggering a signal. This is considered a co-indicent indicator of a business cycle peak.

3. Industrial Production: durable consumer goods. year over year change. a cross below -2.3 generates a signal. This is considered a co-incident indicator of a business cycle peak.

4. Private Housing – Building Permits: year over year change. This is a very noisy series so we use the year over year change in the 3 month moving average. A cross below -16 generates a signal. This is considered a leading indicator of a business cycle peak.

5. Yield Curve – 10 year UST minus 3 month US T-bill. A compression of the yield curve below zero generates a signal. This is considered a leading indicator of a business cycle peak.

6. National Financial Conditions – leverage subindex. We use the absolute value of the index (which is measured in standard deviations). A cross above 0.5 generates a signal. This is considered a leading indicator of a business cycle peak.