For a while, there, I wondered whether the world's economies had changed so much since Covid that all the old, time-honoured, relationships had broken. Was it really possible that such a sharp rise in interest rates would not lead to recession? For a couple of months, it seemed that such a change in patterns might just be happening. Reassuringly for my self-respect, though not for the world's people (recession is always bad), new data for the ISM and PMI surveys point to a continued slide.
As usual, the thick green line is the one to concentrate on. It shows data with the smallest random deviation, because both the ISM and the PMI have been extreme adjusted, and in addition, the average of two statistically independent time series has reduced random month-to-month fluctuations ("error term").
As a warning, though, that my forecast of recession this year might still be wrong, the combined manufacturing and services PMI/ISM is in an uptrend, even though it fell in March. But remember, it is manufacturing and construction and durable goods which drive the business cycle, not services.
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