Some Shorts …
Economic News & Recessions, how low can mortgage rates go, LT unemployed & transfer payments, interest rate expectations & Un Claims, & Uncertainty and Small Caps
Just a few random quickies that caught my eye this week.
1. No Recession Here
The Daily News Sentiment Index from the San Francisco Fed is a high frequency measure of economic sentiment based on lexical analysis of economics-related news articles. It constructs sentiment scores for economics-related news articles from 16 major U.S. newspapers compiled by the news aggregator service LexisNexis. The newspapers cover all major regions of the country, including some with extensive national coverage such as the New York Times and the Washington Post. This index aggregates the individual article scores into a daily time-series measure of news sentiment constructed as a trailing weighted-average time series, with weights that decline geometrically with the length of time since article publication.
Chart 1 overlays this index with U.S. recessions shown by the gray bars and it has appropriately warned about each of the six recessions which have occurred since 1980. Normally, during recessions, this index spikes significantly lower into negative territory. It is encouraging, at least so far, that as the Fed initiates an easing campaign yesterday, this economic news sentiment index is not giving any signs of an imminent recession. It remains solidly above zero and relatively calm. It will be interesting to watch this daily index over the next couple months in assessing whether the Fed is easing into a recession or just a soft landing?
