Industrial production fell 0.1% in January, the Federal Reserve reports, delivering a moderately worse-than-expected reading for the start of the year. Is that a sign of trouble for the business cycle in 2013? Possibly, but we’ll need to see more dark news from this and other indicators before the broad picture issues a clear warning. For now, it’s best to consider the latest data point for industrial production as a normal fluctuation within a slow-growth context.
Daily Archives: February 15, 2013
Four Market Indicators Suggest That US Recession Risk Is Low
When recession risk is high, what signals do you expect from the markets? The empirical record and a deep library of research tell us to look for the following: a stock market that’s posting negative year-over-year returns; a credit spread that’s rising vs. year-earlier levels; a Treasury yield spread that’s currently negative; and annual increases in oil prices. If all four danger signals were present, our cyclical goose would probably be cooked. But that’s not the case at all. In fact, none of those warning conditions currently exist.