US Macro Report – April 2017

Is the US economy heading into a recession?

Most investors won’t know until it is too late. The National Bureau of Economic Research (NBER) declares beginning and end of recessions, but often with a delay of more than a year.

The Economic Cycle Research Institute (ECRI) famously called a recession in September 2011 which never materialized.

The Federal Reserve Bank System calculates a recession probability based on only four indicators (payrolls, industrial production, real personal income and real sales). Those data are prone to revisions.

Lighthouse has developed its own 13-factor recession probability indicator. Instead of fixed thresholds it uses ranges, and weighs each indicator based on timeliness and accuracy.

The Lighthouse Recession Probability Indicator provides early warning signals, yet has not made any false positive calls when backtested to 1971.

US Macro Report – April 2017