Fed Funds and the economy

 Changes in interest rates cause swings in economic activity, but with a lag.  The lag varies from cycle to cycle and economy to economy.   Also, when interest rates rise, they cause the economy to fall (with a lag).  And when they fall, they cause the economy to recover (again with a lag, though the lag may be different from when interest rates are rising).  So, in the chart below, the change in the Fed Funds rate is plotted inverted, with a lag.   I have chosen an 18 months lag, but as I said, it varies from cycle to cycle.  With the GFC (2007-2009) the lag was longer, for reasons I've discussed before.

What this indicator points to is a recession as deep as the GFC, and a lower turning point at the end of 2024.

The QCI is an equally-weighted average of the volume of retail sales, industrial production, and non-agricultural employment.
It closely tracks quarterly GDP.