The Federal Reserve’s Labor Market Conditions Index (LMCI) eased slightly in July, ticking down to 1.1 from 1.4 in the previous month. The slightly positive value equates with a labor market that’s expanding, but at a sluggish rate. Yet translating LMCI’s historical record into recession risk estimates via a probit model still indicates that the broad macro trend remains positive for the US. That’s also the message in the jobless claims data and a real-time estimate of business conditions via market numbers. We’ll have a more reliable estimate of recession risk through July with the monthly update of the Economic Trend & Momentum indices that’s scheduled for later this month. Meantime, the early clues suggest that macro risk is still low for the US. To be precise, the current numbers suggest that the NBER isn’t likely to declare July as the start of a new recession.
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● The Fed’s Labor Market Conditions Index remains mildly positive in July
● NY Fed: US consumer spending expectations drop sharply in new survey
● Treasury market’s US inflation estimate is sliding
● Economic confidence in Germany slides to 9-month low in August
● China devalues its currency
● Will China’s devaluation spark a currency war?