The National Bureau of Economic Research (NBER), the official arbiter of recessions, uses six monthly indicators to determine recessions. It looks for a contemporaneous peak across them to know that a downturn is sufficiently spread across the economy (diffusion). The NBER looks for three qualities to call a recession: depth, duration, and diffusion. On their website, they write,

The NBER’s definition emphasizes that a recession involves a significant decline in economic activity that is spread across the economy and lasts more than a few months.

There is no significant decline and the decline has only lasted a month so far (which takes time to monitor and is why NBER recession announcements come much later than when they start), but in the most recently released data (three released last Friday), five of the NBER’s six indicators are negative concurrently, a rare condition that has historically only occurred during recessions (see black ovals in chart below) with two exceptions; one in April 1979 and one in March 1993 (see black arrows in chart below). This shows that economic weakness is broad-based. The six indicators are:

1. Real personal income less transfer payments, May, -0.1%
2. Non-farm payrolls, May, +0.1%
3. Household survey employment, May, -0.4%
4. Real personal consumption expenditures, May, -0.3%
5. Real wholesale and retail sales, April, -0.4%
6. Industrial production, May, -0.2%

Note: April is the latest data for ‘Real wholesale and retail sales’.

The non-farm payrolls series hasn’t fallen yet and is very important, one of the top two things the NBER considers, making it seem unlikely April was a business cycle peak (unless subsequent revisions make payrolls negative in the past), but it is at least a candidate for one to watch. Given the preconditions for a recession are in (yield curve inversion to de-inversion, material Leading Economic Index drop, Sahm rule triggered last year, 5 years since the last one), a worthy recession catalyst happened (trade war), and now the rapid onset of weakness in consumer spending, labor, housing, and inflation in the last few months (i.e., the LDEI near -40); signs of recession take on heightened meaning now. I expect one to start within the next few months (if not the last couple) given this coalescence of factors.