Every downturn has its sequencing "flavor" but the leading recessionary markers are clear:
✅ A huge drop in consumer confidence.
✅ Sharp fall in housing permits.
✅ Rapid rise in Fed Funds Rate.
We believe the recent spike in housing permits is a temporary uptick in an otherwise strong downtrend that is yet to bottom.
Worth noting that June 2008 saw a strong spike too deep in the heart of the recession.
Unusually, the Fed Funds Rate looks like a coincident, rather than leading, indicator.
However, our view is that this is a function of just how late the Fed was to raise rates as a result of the "transitory" inflation narrative debacle of 2021.
But what about GDP you might ask?
YoY Real GDP is currently 0.9% and in a strong downtrend.
Here are the YoY Real GDP prints at the start of the last 7 recessions: