Decision Analyst's November U.S. Economic Index hints at a 2024 Recession

Arlington, Texas—The Decision Analyst U.S. Economic Index for November 2023 is 106, a 3-point increase from November 2022 (103) and a 3-point increase from October 2023 (103). The U.S. Economic Index tends to be a leading indicator of the overall U.S. economy, as suggested by the past-20-year history of the Index shown below.

“The Economic Index has been relatively flat over the past two years, ranging between 100 and 105 most of that period. The flatness or stagnation in the U.S. Economic Index over the past 2 years has been driven by restrictive monetary conditions (higher interest rates, quantitative tightening, and more cautious lending by U.S. banks). The effects of the more restrictive monetary policy by the Federal Reserve have yet to reach their maximum; Fed policy will exert a downward pull on the U.S. economy throughout most of 2024, and the cumulative and continuing effects of high inflation will also exert a downward pull on the U.S. economy during the same time frame. The repayment of student loans is another negative factor to keep in mind. The struggles in Washington D.C. over budgets and the risks of a government shutdown in early 2024 might be another negative factor. A recession beginning in the first or second quarter of 2024 is entirely possible,” 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, “but increases in unemployment typically start late in a recession, so we should not be too positive about the sanguine employment numbers.”

Future Purchase Intent

“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 sound footing (that is, based on near full employment and future purchase plans). However, we can’t fully trust the unemployment numbers because unemployment tends to be a lagging indicator of recession,” Thomas explained.

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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