Decision Analyst's September U.S. Economic Index Suggests A Recession Is Possible

Arlington, Texas—The Decision Analyst U.S. Economic Index for September 2023 is at 104, a 1 point increase from September 2022. Since the U.S. Economic Index tends to be a leading indicator of the overall U.S. economy, Despite the slight increase this month, the more general 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 U.S. Economic Index over the past 2 years has been largely driven by high inflation rates. Inflation reduces consumers’ purchasing power and tends to weaken the economy. Labor shortages continue to affect some sectors of the U.S. economy, but the labor market has cooled off over the past 12 months (that is, demand for workers is moderating). Supply chain issues continue to pose some problems for some parts of the economy, but for the most part, supply lines are fully restored. Tightening of the U.S. money supply, rising interest rates, and stricter banking loan requirements are acting as drags on the U.S. economy. Another factor is the restart of student loan repayments this fall, an additional economic drag. The labor strikes (especially in the auto industry) are also acting as a drag on the overall economy. The dysfunction of the U.S. government in Washington, D.C., is not helping the economy either. A recession beginning in late 2023 or early 2024 remains a definite possibility,” 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 metrics suggest consumer consumption (about 70% of the U.S. economy) remains on a solid footing (that is, based on near full employment). Employers are reluctant to lay off workers because of fears that those workers could not be easily replaced if the economy should strengthen,” Thomas explained.

Future Purchase Intent

The following 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 across most of these major categories, but buying new furniture for home and remodeling existing home appear to be trending downwards.

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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