‘McCulley Indicator’ Suggests Recession a Matter of Time: Chart

The “McCulley indicator” is close to rolling over. In market speak, that means that the U.S.’s gauge of core capex orders -- those excluding military and aircraft, and named for former Pacific Investment Management Co. chief economist Paul McCulley, who viewed it as a recession indicator -- has been in a downtrend since November 2017. Over the last 20 years, when the data print has crossed below zero for the three-month average of the year-over-year change, recessions followed in 2001 and 2007, though the Federal Reserve’s bond buying helped keep growth afloat during the 2010s. For more market commentary, see the MLIV blog.