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Steno Signals #69 – The recession playbook

Recession models are mostly based on manufacturing, which currently rebounds leading to the conclusion that the recession risk recedes? But are actual recession risks rather on the rise?
2023-10-15

 

Happy Sunday everyone and welcome to our flagship editorial!

I will keep it short and sweet this week on my way to Mallorca!

We have now formalized our recession call for Q1-2024 (in the US) as we have patiently waited all year and called for better than feared performance in the US economy.

Interestingly, we see a diverging path for Manufacturing and Services ahead short-term, which will likely wrongfoot many economists and traders.

Manufacturing is currently restocking, while services are on the decline. A decline in Services is basically what triggers an actual recession in payrolls.

Chart 1: The recession road map 

Recession models are mostly based on manufacturing, which currently rebounds leading to the conclusion that the recession risk recedes? But are actual recession risks rather on the rise?

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