by Thomas Wash | PDF

The business cycle has a major impact on financial markets; recessions usually accompany bear markets in equities.  The intention of this report is to keep our readers apprised of the potential for recession, updated on a monthly basis.  Although it isn’t the final word on our views about recession, it is part of our process in signaling the potential for a downturn.

The Confluence Diffusion Index remained in contraction territory. The June report showed that seven out of 11 benchmarks are in contraction territory. Last month, the diffusion index was unchanged at -0.2727,  below the recovery signal of -0.1000.

• Financial conditions eased due to interest rate cut expectations.
• Consumer confidence faded as households expressed concerns about their future.
• There was a slowdown in hiring throughout the private sector.

The chart above shows the Confluence Diffusion Index. It uses a three-month moving average of 11 leading indicators to track the state of the business cycle. The red line signals when the business cycle is headed toward a contraction, while the blue line signals when the business cycle is in recovery. The diffusion index currently provides about six months of lead time for a contraction and five months of lead time for recovery. Continue reading for an in-depth understanding of how the indicators are performing. At the end of the report, the Glossary of Charts describes each chart and its measures. In addition, a chart title listed in red indicates that the index is signaling recession.

Read the full report

by Thomas Wash | PDF

The business cycle has a major impact on financial markets; recessions usually accompany bear markets in equities.  The intention of this report is to keep our readers apprised of the potential for recession, updated on a monthly basis.  Although it isn’t the final word on our views about recession, it is part of our process in signaling the potential for a downturn.

The Confluence Diffusion Index fell for the fourth consecutive month. The May report showed that seven out of 11 benchmarks are in contraction territory. Last month, the diffusion index slipped from -0.2121 to -0.2727, below the recovery signal of -0.1000.

• Financial conditions eased slightly in the previous quarter due to easing inflationary pressures.
• Consumer confidence rose unexpectedly due to economic optimism.
• The labor market continues to show signs of cooling, even though payrolls remained strong.

The chart above shows the Confluence Diffusion Index. It uses a three-month moving average of 11 leading indicators to track the state of the business cycle. The red line signals when the business cycle is headed toward a contraction, while the blue line signals when the business cycle is in recovery. The diffusion index currently provides about six months of lead time for a contraction and five months of lead time for recovery. Continue reading for an in-depth understanding of how the indicators are performing. At the end of the report, the Glossary of Charts describes each chart and its measures. In addition, a chart title listed in red indicates that the index is signaling recession.

Read the full report

by Thomas Wash | PDF

The business cycle has a major impact on financial markets; recessions usually accompany bear markets in equities.  The intention of this report is to keep our readers apprised of the potential for recession, updated on a monthly basis.  Although it isn’t the final word on our views about recession, it is part of our process in signaling the potential for a downturn.

The Confluence Diffusion Index fell deeper into contraction, in a sign that the expansion is struggling to gain traction. The April report showed that seven out of 11 benchmarks are in contraction territory. Last month, the diffusion index slipped from -0.1515 to -0.2121, below the recovery signal of -0.1000.

• Financial conditions loosened as Fed officials kept rate cuts on the table for 2024.
• Goods-producing activity tapered as households grow more pessimistic about the economy.
• Employment gains slowed in a sign that the labor market is starting to cool.

The chart above shows the Confluence Diffusion Index. It uses a three-month moving average of 11 leading indicators to track the state of the business cycle. The red line signals when the business cycle is headed toward a contraction, while the blue line signals when the business cycle is in recovery. The diffusion index currently provides about six months of lead time for a contraction and five months of lead time for recovery. Continue reading for an in-depth understanding of how the indicators are performing. At the end of the report, the Glossary of Charts describes each chart and its measures. In addition, a chart title listed in red indicates that the index is signaling recession.

Read the full report

by Thomas Wash | PDF

The business cycle has a major impact on financial markets; recessions usually accompany bear markets in equities.  The intention of this report is to keep our readers apprised of the potential for recession, updated on a monthly basis.  Although it isn’t the final word on our views about recession, it is part of our process in signaling the potential for a downturn.

The Confluence Diffusion Index receded from the previous month, in a sign that the economy is still fragile. The March report showed that seven out of 11 benchmarks are in contraction territory. Last month, the diffusion index slipped from -0.0909 to -0.1515,  slightly below the recovery signal of -0.1000.

• Investors’ dimming hopes for a June rate cut have caused a mild tightening of financial conditions.
• Sinking housing starts signal a potential slowdown in construction activity.
• Payroll data appears positive, but pockets of weakness remain in the job market.

The chart above shows the Confluence Diffusion Index. It uses a three-month moving average of 11 leading indicators to track the state of the business cycle. The red line signals when the business cycle is headed toward a contraction, while the blue line signals when the business cycle is in recovery. The diffusion index currently provides about six months of lead time for a contraction and five months of lead time for recovery. Continue reading for an in-depth understanding of how the indicators are performing. At the end of the report, the Glossary of Charts describes each chart and its measures. In addition, a chart title listed in red indicates that the index is signaling recession.

Read the full report