US business cycle chart book – The biggest risk to the outlook is the virus and reopening rollbacks

What Policy Makers are Saying

"The Federal Reserve is strongly committed to using our tools to do whatever we can for as long as it takes to provide some relief and stability to ensure that the recovery will be as strong as possible and to limit lasting damage to the economy... The Fed will continue to use these powers forcefully, proactively, and aggressively until we're confident that the nation is solidly on the road to recovery."

– Fed Chair Powell (Congressional Testimony on 6/30/20)

"The PPP is keeping tens of millions of employees connected to their jobs. Economic impact payments are also helping millions of families and workers through these challenging months... we're beginning to have conversations about supplemental relief legislation, we look forward to working with Congress on a bipartisan basis in July on any other further legislation that will be necessary. Treasury has already been entrusted with a tremendous amount of funding to inject into the economy. We are closely monitoring these results and seeing conditions improve. We would anticipate that any additional relief would be targeted to certain industries that have been especially hard hit by the pandemic, with a focus on jobs and putting all Americans back to work who have lost their jobs through no fault of their own."

- Treasury Secretary Mnuchin (Congressional Testimony on 6/30/20)

U.S. Leading Economic Indicators (LEIs) Index

Conference Board's LEI Index and YoY Rate of Change

Analysis: The LEI index bounced back in May. And given the bounce I'm positive on this picture. It's also confirmed by a move higher in the OECD U.S. leading index for May. As I noted previously, this will likely be the first time the LEIs failed to signal an imminent recession (given the positive picture for the Feb LEIs). That speaks to the sudden exogenous shock nature of the current Covid19 pandemic/shutdown. Framework: I'd get negative if the YoY rate of change moved lower again.

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