US Recession – In a week in which Albert Edwards of Société Générale warned that the US economy is about to collapse into a recession and the August jobs reported showed the number of jobs created in the US slowed significantly last month, Deutsche Bank’s analysts are claiming that there’s no recession in sight for the US economy.

According to a report put together by Torsten Slok, Ph.D. Chief International Economist for Deutsche Bank earlier this week, the US economy continues to expand despite deteriorating headline figures. Here are some of the reasons why Torsten Slok believes this is the case.

US Recession – not coming says Deutsche Bank

The US misery index is an economic indicator created by economist Arthur Okun and currently at one of the lowest levels this century. The index’s components are the unemployment rate added to the inflation rate and as shown in the chart below, the index sits at a little above 5%, the lowest level since the late 50’s.

US Recession
US Recession

With economic misery levels near record levels, home sales are accelerating — a sign of stronger
consumer confidence and easier access to credit. The number of new single family houses sold is returning to pre-crisis levels and the sales of homes between $200k and $300k accelerating.

US Recession

One of the key themes that has caused analysts to claim that the US is heading for a recession is the declining corporate capex spend. However,  Deutsche believes capex spending accelerated going into the second half.

US Recession

Industrial production surveys also point to capex growth.

US Recession

Consensus estimates for US GDP growth predict steady growth of around 2.2% per quarter till the end of 2017.

US Recession

Banks are also lending more. Weekly data for bank lending continues to grow at 8% year-on-year. Meanwhile, the average time taken to fill a vacant job slot has increased from 23 days in 2006 to 27 days today indicating tightness in the labor market. The number of available people per job opening is now below 2006/2007 levels.

US Recession

The number of job openings per hire is trending higher with no sign of slowing down implying that those who have left the labor force during the past few years may start to return.

US Recession
US Recession

Wages are already rising for both men and women. According to the Atlanta Fed wage growth tracker, wage growth is trending close to pre-crisis levels.

US Recession

Wage growth for the job switcher is already back at pre-crisis levels and wage growth is being reported across all income levels.

US Recession

And finally, inflation is starting to pick up again, even after accounting for low oil prices. US Recession