Decision Analyst's June Economic Index Indicates Recession Risk

Arlington, Texas—The Decision Analyst U.S. Economic Index for June 2023 is 104, the same score as May 2023 and a 4-point increase from a year ago (June 2022). However, the Index remains below its pre-COVID high in the late spring of 2021 by 14 points. Since the U.S. Economic Index tends to be a leading indicator of the overall U.S. economy, the downward trend suggests a mild recession might begin in late 2023 or early 2024. The past-20-year history of the Index is shown below.

“The decline in the Economic Index over the past 2 years has been driven by high inflation rates, particularly in energy, food, and housing costs. Inflation reduces consumers’ purchasing power and tends to weaken the economy. Labor shortages continue to affect many sectors of the U.S. economy, and fewer workers mean goods cannot be produced and services cannot be rendered. Supply chain issues continue to pose problems for some parts of the economy, although this negative is fading away. Actions by the Federal Reserve to push interest rates higher are slowing economic activity. Tightening of the money supply and the tightening of banking loan requirements are also acting as drags on the U.S. economy. The probability of recession beginning in late 2023 or early 2024 remains high,” said Jerry W. Thomas, President/CEO of Decision Analyst.

Employment

“Decision Analyst tracks the U.S. unemployment rate and labor force participation rates, and both important metrics suggest consumer consumption (about 70% of the U.S. economy) remains on a solid footing (that is, a foundation of solid, full-time jobs). Employers are reluctant to lay off workers, because of recent tightness in the labor market. A growing number of workers are seeking part-time work to supplement household incomes. Many sectors of the economy are struggling, especially manufacturing,” said Thomas.

Future Purchase Intent

“The graphs show the percentages of U.S. households that say they are likely to make various types of purchases in the next 12 months. A quick look at the trend charts reveals that consumers’ spending plans are relatively flat in June 2023 across most of these major categories. The one exception is taking a vacation and buying new furniture for the home, where the trend line is more favorable,” said Thomas.

Methodology

The Decision Analyst Economic Index is based on a monthly online survey of several thousand households balanced by gender, age, and geography. The scientific survey is conducted in the last 10 days of each month. The Economic Index is calculated from 9 different economic measurements using a sophisticated econometric model. The result is a snapshot of coming economic activity in each country surveyed, as seen through the eyes of representative consumers living in the respective countries.

Decision Analyst also conducts its concurrent economic surveys each month in Argentina, Brazil, Canada, Chile, Colombia, France, Germany, India, Italy, Mexico, Peru, the Russian Federation, Spain, and the United States. Whenever the Decision Analyst Economic Index is greater than 110, it tends to signal an expanding economy. An Index value of 90 to 110 suggests a no-growth or slow-growth economy, and near or below 90 generally indicates economic contraction. These guidelines vary by country, however.

About Decision Analyst

Decision Analyst (www.decisionanalyst.com) is a global marketing research and analytical consulting firm specializing in strategy research, new product development, advertising testing, and advanced modeling for marketing decision optimization. For over 45 years, the firm has delivered competitive advantage to clients throughout the world in consumer-packaged goods, telecommunications, retail, technology, medical, and automotive industries.

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