Summary: The macro data from the past month continues to mostly point to positive growth. On balance, the evidence suggests the imminent onset of a recession is unlikely. The largest risk to the economy is the escalation in trade war rhetoric.

The bond market agrees with the macro data. The yield curve has 'inverted' (10 year yields less than 2-year yields) ahead of every recession in the past 40 years (arrows). The lag between inversion and the start of the next recession has been long: at least 10 months and in several instances as long as 2-3 years. On this basis, the current expansion will likely last into early 2019 at a minimum. Enlarge any image by clicking on it.



Unemployment claims are also in a declining trend, reaching a new 49 year low in mid-May (and nearly this low in late-July). Historically, claims have started to rise at least 7 months ahead of the next recession.



New home sales made a new 10 year high in November and were only marginally lower in June. In the past 50 years, at least 11 months has lapsed between the expansion's high print in new home sales and the start of the next recession.



Real retail sales made a new all-time high (ATH) in June. The trend higher is strong, in comparison to the period prior to the past two recessions.