Tuesday, January 17, 2012

Mish on recession indicators

Turning points in unemployment, heres Mish:
Looking at longer-term trends, I count 4 instances in red where weekly-claims was more of a lagging indicator than anything else. A recession started 4 times with weekly claims at or very near the lows.

I count 3 recessions in green where a weak case can be made that claims are a leading indicator. However, I can also count six instances in which weekly claims turned up relatively sharply and there was no recession.

Mish reminds me of those CERN physicists, trying to find the optimum encoding of a finite set of events seeing if they identify a Higgs.

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