From the Philadelphia Federal Reserve:
"The Aruoba-Diebold-Scotti (ADS) business conditions index is designed to track real business conditions at high frequency. Its underlying (seasonally adjusted) economic indicators (weekly initial jobless claims; monthly payroll employment, industrial production, personal income less transfer payments, manufacturing and trade sales; and quarterly real GDP) blend high- and low-frequency information and stock and flow data.
The average value of the ADS index is zero. Progressively bigger positive values indicate progressively better-than-average conditions, whereas progressively more negative values indicate progressively worse-than-average conditions. The ADS index may be used to compare business conditions at different times. A value of -3.0, for example, would indicate business conditions significantly worse than at any time in either the 1990-91 or the 2001 recession, during which the ADS index never dropped below -2.0."
MP: The chart above displays the daily ADS index from the beginning of 2000 through the end of July. Recent values of the ADS business index are close to zero and have gradually been increasing from the recent lows in March. This real-time measurement of business conditions is indicating no statistical evidence of a recession, and is in fact providing support for business conditions that are close to average.
Recent readings from other financial and economic indicators are also showing no evidence of recessionary conditions in the U.S. economy including:
1. Bloomberg's "U.S. Financial Conditions Index" has been rising for the last year, indicating a gradual and ongoing improvement for the underlying conditions in the U.S. financial markets.
2. The Chicago Fed National Financial Conditions Risk Subindex is at the lowest (best) level in more than a year, and has been declining (improving) since the beginning of the year.
3. The St. Louis Financial Stress Index has been trending downward (improving) since last October and is back to pre-recession 2007 levels.
4. The Kansas City Financial Stress Index has been below zero for the last five months (a sign of low stress), and this measure of financial stress is also now back to pre-recession 2007 levels.
Bottom Line: Where's the recession? Surely there would be indications from at least one of these five measures of economic and financial conditions if the economy was weakening to the point that a recession was underway or pending? All five indicators accurately signaled the last recession in 2007-2009, so they can't all be wrong this time, can they?