The U.S. unemployment rate is below 5%, manufacturing is picking up, and jobless claims are falling, but Deutsche Bank AG says there's still reason to worry about a recession.
According to the firm's Chief U.S. Economist Joseph LaVorgna, looking at the index of leading economic indicators — a measure by the Conference Board that includes economic indicators believed to change before the broader business cycle — brings cause for concern.
"While consumer spending was relatively sturdy in the second quarter and nonfarm payroll growth rebounded solidly last month, the downward trend in the growth rate of the LEI indicates that near-term risks to growth remain to the downside," he writes.
Here's a chart from the note, where recessions are shaded in grey. "As the chart below illustrates, in the past two business cycles, an outright year-over-year decline in the LEI after a prolonged period of growth has presaged recession," LaVorgna says.
