Systematic approach to business cycle suggests recession still likely

I have always taken a systematic approach to global macro investing. Do not ask about, what you feel. Show the number, explain a process. The folks from ClearBridge Investments do a good job of having a simple dashboard for determining recession risk.

Their dashboard is divided into three parts, consumer, business activity and financial factors. The financial factors focus on many of the indicators associated with other financial condition indices, the yield curve, money, and credit spreads. The yield curve is inverted, money supply growth is negative, but credit spreads are still tight. The business activity portion of the dashboard focuses on commodities, profit margins, the ISM new orders, and truck shipments. The truck shipment data is a little harder to get but there are some shipment and freight numbers form private companies. The business sector is only flashing caution. The consumer sector focuses on wage growth, retail sales, jobless claims, job sentiment, and housing permits.

The overall signal is still suggesting that recession is high based on this ensemble.