No Longer Indicating Recession

Alas, a little-known recession indicator has stopped flashing red — at least for now. The Philadelphia Fed’s State Coincident Index — crunching four employment indicators from all 50 states — clocked in at 76 in October.

Readings below 50 have predicted every recession of the last 30 years, with only one false alarm — last year, in the midst of QE2.

Or is that two now? The index sat below 50 from May through August, but recovered in September to 64 — and added 12 more points last month.


Well, the Fed continues to roll over all the Treasuries it bought during QE2, which some pundits label “QE 2.5.”

The monetary mandarins may be succeeding in postponing the inevitable. But we remain on guard for whenever they run out of paper clips and rubber bands to hold the whole thing together.

Addison Wiggin
for The Daily Reckoning