Notice that today the influence weighted Onalytica Recession-Index (US Economy) has reached the lowest level of the last three months.
From our experience, as the influence weighted index has dipped below the equally weighted Onalytica Recession-Index (US Economy), there is reason to believe that the general public’s perception of the US economy will improve.
The focus on the issue of recession in the context of UK economy has risen during December 2012 and first half of January 2013. In that period the Onalytica Recession-Index (UK Economy) jumped 18%. However, the index has recently started to drop again, while the Telegraph reported that the recovery of the economy is back on track.
The spikes in the downward trend of the index, started at the end of April 2012, show that there is a certain nervousness on the market regarding the health of the UK economy.
The Onalytica Recession-Index (UK Economy) has decreased 14% since a year ago and currently is around the lowest level in a year.
The US “fiscal cliff” deal marked a turning point in expectations of a recession in the US. After peaking on January 3 (61%), the Onalytica Recession-Index (US Economy) has fallen sharply, reaching 26% on January 22, 2013. The current value of the index is roughly at a similar level to where it was a year ago.
During the second half of this year the focus on fiscal cliff in the context of US Economy has become increasingly popular.
The first chart below shows the trend of the public debate on fiscal cliff since July 2012. All the participants to debate have an equal weight on the topic of US Economy. This means that national media, influential economists and personal blogs have all an equally important voice in the debate.
There is a growing feeling that the US Economy is improving.
On 11 December 2012 the Onalytica Recession-Index (US Economy) has decreased by 6.6 percentage points since 7 days before (see first chart below). The underlying trend for both Onalytica Crisis-Index (US Economy) and Onalytica Debt-Index (US Economy) is downward; the former fell 7.9 percentage points, while the latter was 7.6% below its level on 4 December 2012.
Some time ago we have listed the TOP 100 economics blogs, ordered according to their Onalytica Influence Index.
Similarly to how academic journals compute their Impact Factor, we determined the most influential economics blogs based on the number of citations that they receive.
A great deal has changed since half a year ago, when we published the 100 most influential blogs. Some of the blogs on the list no longer have regular posts. Others have grown and become better. Some blogs have only come under our radar in the recent months.
Onalytica Indexes are a collection of alternative financial indices which reflect how economic and business issues such as recession, inflation, crisis, etc. are perceived by the population in general and by those with more influence in the debate.
Moreover, the indices are related to several classical financial indices and indicators of the state of the economy.
In a previous post I highlighted a small example of how the Onalytica Recession-Index gave a good indication of an impending recession in the UK.
However, I haven’t had the opportunity to conduct a more thorough analysis so I recently asked my colleague, Dr. Andreea Moldovan, to have a look at the Onalytica Recession-Index in relation to GDP. Her findings impressed me.
Figure 1 (below) shows the UK GDP against Recession-Index for UK Economy. The values for GDP are given in quarterly percentage (or relative) change on previous quarter.
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OECD is now forecasting that the UK economy will enter a recession (story from Telegraph).
From a macro perspective I guess it is not counter-intuitive that growth comes to a halt when the world is engaged in a massive deleveraging operation; and at the same time impacted by the increasing uncertainty caused by the public finances in the Euro Zone.
But reading the forecast from the OECD I couldn’t help think back on the previous posts on this blog about how the change in online sentiment for some time as indicated that a recession was becoming more likely.
The Wall Street Journal has a story that economists think there is a reduced chance of recession in the U.S.
According to the story 52 economists surveyed in November put the chance of a U.S. recession in the next 12 months at 1-in-4, down from 1-in-3 two months ago.
I checked the Onalytica Recession-Index for the U.S. Economy to see if I could corroborate that. The chart is shown below.