Economic reports in recent weeks suggest that the growth trend for the US has decelerated, but the softer numbers in the aggregate still fall short of reflecting substantially higher recession risk. The outlook is moderately darker from the vantage of financial and commodities markets, but for the moment there’s no clear sign that a downturn is imminent via the economic numbers overall.

Near-term projections of The Capital Spectator’s proprietary business cycle indexes point to a positive macro trend for the immediate horizon. The question is whether the recent warnings by way of markets will find support in the hard economic data in the weeks and months ahead? If that happens, the earliest point for a data-based regime shift is September. As for August, most of the preliminary figures are in and there’s still a healthy tailwind blowing. Nonetheless, watching the incoming data closely is a high priority at this stage in the wake of recent events.

As for analyzing the published data to date, the broad trend still looks favorable, albeit with some cuts and bruises relative to last month’s update. Notably, the year-over-year change in the real (inflation-adjusted) monetary base has fallen modestly deeper into the red. There’s also an ongoing warning sign in the corporate yield spread. In addition, the recent weakness in industrial production bears attention—the 0.9% annual increase is the lowest since the Great Recession. If there’s trouble brewing, we’ll see the telltale signs as early as the October profile.

For the moment, the main threat is a higher probability of slower growth. That could lead to a recession, of course, but there’s no hard evidence for that scenario at this point. The data set that’s available today continues reflect a generally upbeat trend. Using based on a methodology outlined in Nowcasting The Business Cycle: A Practical Guide For Spotting Business Cycle Peaks, an aggregate of economic and financial behavior shows that business-cycle risk remained low through last month. In other words, slower growth is likely to persist. The Economic Trend and Momentum indices (ETI and EMI, respectively) are still at levels that equate with expansion. The current profile of published indicators through last month  (12 of 14 data sets) for ETI and EMI reflect a positive trend overall. The two exceptions at this point: the corporate bond spread and the real monetary base.