Is the US in a recession? Here are 15 indicators to watch

Tough times can be very instructive.

Pandemic shortages gave way to supply chain shocks gave way to inflation. The fallout could be a broader slowdown in economic activity.

While the swings made the future difficult to predict, we've learned a lot about the economy – and how interconnected it is – along the way.

In 2023, the collision of a pullback in consumer activity with inflation has many bracing for a recession. But economists believe that we aren’t in such a period of economic downturn yet. That has brands and retailers watching for signs of what might happen next.

At the NRF Big Show, a session led by National Retail Federation Chief Economist Jack Kleinhenz, KPMG senior economist Kenneth Kim and Morgan Stanley Economist Sarah Wolfe ticked through some of the key indicators that are monitored to provide a snapshot of how the economy is doing. Below is a look at the top measures covered. They're reported regularly in good times and bad, and also provide a snapshot of the health of the consumer:

GDP, or gross domestic product, is a measure of overall economic activity in the U.S., across consumer spending and business activity. Released quarterly, this is a leading indicator of whether the economy is growing or contracting.

Unemployment and the monthly report on jobs added or lost by employers from the US Bureau of Labor Statistics is an important measure of how the economy is affecting people and their ability to earn a livelihood. It doubles as a primary indicator of consumer health. As Kleinhenz put it, if consumers feel secure in their job, they will feel better about buying goods.

JOLTS, or job openings and labor turnover survey, measures the number of jobs that employees are seeking to fill across the economy. A rising number of job openings indicates a tight labor market, which is seen as a sign of a strong job situation.

Employment Cost Index is a measure of the change in labor costs, including wages and benefits. Measured on a quarterly basis, this tracks whether compensation for employees is getting higher.

Inflation measures price increases. Reported on a monthly basis, inflation has been closely watched over the last year as it rose to 40-year-highs following supply chain chaos and disruption from the war in Ukraine, among other factors. Inflation is available in two measures: The Consumer Price Index and the Personal Consumption Expenditures Index. CPI is typically the headline inflation number watched by businesses, while PCE offers a complete picture that is followed by economists and policymakers, including the Federal Reserve. For a breakdown of the difference, see this St. Louis Fed piece. While the CPI tracks the price of goods, additional key areas to watch for overall economic health are services inflation and shelter inflation, which measures areas including rent.

Wholesale inflation, measured by the Producer Price Index, measures the price of goods purchased upstream from manufacturers at the phase before they reach retail. This is considered a forward-looking measure of inflation.

Personal consumption expenditures (PCE) is a report issued monthly that includes a number of consumer metrics. Along with price, it includes overall consumer spending, disposable income and savings.

Consumer credit measures the amount owed by consumers across the economy. If consumer credit is high, it is a sign that people have less disposable income, and are looking to defer payments.

Federal Reserve interest rate is a benchmark interest rate set by the U.S. Central Bank that determines the cost of borrowing throughout the economy. This has wide-reaching effects, including on mortgage rates and other loans. In a bid to bring down inflation, the Fed is currently raising interest rates aggressively following a period of multiple years when they were at or near zero. This is designed to cool demand in the economy, so it runs the risk of slowing down activity.

Consumer Confidence Index is the Conference Board’s measure of attitudes, spending plans, and expectations for inflation, stock prices, and interest rates. Released monthly, this is an indicator of consumer willingness to buy.

Consumer Sentiment Index, as measured by the University of Michigan, measures the future plans for people, including whether they will save or spend. This is done through buying conditions and inflation expectations for given periods ahead into the future.

Inverted yield curve describes when short-term interest rates on US treasury bonds are higher than long-term interest rates. This is closely watched by investors on Wall Street as an indicator of a future recession, as it has appeared about one year before nearly all recessions since 1960.

Annual Survey of Manufacturers (ASM) is a U.S. Census Bureau report that provides estimates for all manufacturers in the nation. It can be an overall indicator of economic activity.

U.S. retail sales measure the overall sales made by retail establishments. Reported monthly, this is a wide-ranging measure that reaches across gas stations, auto dealers, department stores and category-specific stores. It provides an overall picture of demand in the economy.

PMI (Purchasing Managers Index) measures activity among manufacturers. Measured monthly, 50 is the magic number of this index. If it is above 50, that signals expansion in the manufacturing sector, which is a sign of economic activity humming.

Pay attention to the surveys. This is a lot of hard data to track. But remember to keep in touch with what people are saying. In a speech last week, Philly Fed President Patrick Parker spoke to the value of “soft data” from surveys and consumer conversations.

“But as a policymaker, I’ve come to believe that soft data like survey results are perhaps equally important to getting a full understanding of our economic situation,” Parker said. “Candidly, an overemphasis on hard data can lead to policy errors; last year, hard data suggested to us that inflation would be “transitory,” whereas the soft data we were hearing from our contacts indicated that rising prices were proving more persistent than we may have expected. Which is to say, paying due attention to soft data is vitally important to effective policymaking.”

This is a lesson that can apply to retailers, as well. Talk to customers often. They tend to tell you what they want.