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U.S. Economy: Anatomy of a Recession

Where do we stand - and what should we watch for in the coming months?

Monthly Insights To Help You Stay In Front Of The U.S. Business Cycle

ClearBridge Investments, a specialist investment manager, of Franklin Templeton designed the Anatomy of a Recession (AOR) program to deliver thoughtful perspective on the state of the U.S. economy, with concise, practical views updated every month. Our exclusive recession risk and recovery dashboards provide the statistical foundation of our perspective. Use the tabs below to explore current market views, our interactive dashboard, quarterly presentations and our most recent insight.

U.S. Recession Risk Indicators

March 31, 2021February 28, 2021January 31, 2021

Consumer

Housing Permits
Job Sentiment
Jobless Claims
Retail Sales
Wage Growth

Business Activity

Commodities
ISM New Orders
Profit Margins
Truck Shipments

Financial

Credit Spreads
Money Supply
Yield Curve
Overall Signal

Expansion

Caution

Recession

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades.
Data as of March 31, 2021
Source: ClearBridge Investments, BLS, Federal Reserve, Census Bureau, ISM, BEA, American Chemistry Council, American Trucking Association, Conference Board, and Bloomberg. The ClearBridge Recession Risk Dashboard was created in January 2016. References to the signals it would have sent in the years prior to January 2016 are based on how the underlying data was reflected in the component indicators at the time.

U.S. Recession Risk Indicators

Current20202007-200920011990-19911981-198219801973-19751969-1970

Confidence

Housing Permits
Job Sentiment
Jobless Claims
Retail Sales
Wage Growth

Economic

Commodities
ISM New Orders
Profit Margins
Truck Shipments
n/a n/a

Financial

Credit Spreads
Money Supply
Yield Curve
Overall

Expansion

Caution

Recession

Data as of March 31, 2021
Source: FactSet, Bloomberg, Conference Board, Census Bureau, Federal Reserve, FRBPA, Chicago Fed, ISM, Dept. of Labor, Bloomberg/Barclays, AAII, Investors Intelligence, and Moody’s.

U.S. Recovery Case Dashboard

Q2 2018Q4 2018Q2 2019Q4 2019Q2 2020

Consumer

Housing Permits
Job Sentiment
Jobless Claims
Retail Sales
Wage Growth

Business Activity

Commodities
ISM New Orders
Profit Margins
Truck Shipments

Financial

Credit Spreads
Money Supply
Yield Curve

Source: BLS, Federal Reserve, Census Bureau, ISM, BEA, American Chemistry Council, American Trucking Association, Conference Board, and Bloomberg. The ClearBridge Recession Risk Dashboard was created in January 2016. References to the signals it would have sent in the years prior to January 2016 are based on how the underlying data was reflected in the component indicators at the time.

U.S. Recession Risk Interactive Dashboard

ClearBridge Investments utilizes twelve different economic indicators to assess the risk of recession. This interactive version of our exclusive Recession Risk Dashboard allows you to vary the settings for each indicator based on different scenarios that reflect your own views of future conditions.

  • Each indicator is set to reflect the Dashboard’s current positioning, which is updated monthly, using the most recent data available.
  • Slide the toggle for each indicator left or right to test the market impact of your own “what-if” scenarios.
  • Click the icon next to each indicator for more information about the individual indicator.

Note each individual indicator can signal expansion, caution or recession in the economy. The signals from each of the twelve indicators are combined into an overall dashboard signal of green, yellow or red. The indicators, signals and changes are based on the ClearBridge interpretation of the data and analysis. The data is supplied by ClearBridge Investments, a Franklin Templeton subsidiary. The ClearBridge Recession Risk Dashboard is not a crystal ball, but can serve as a tool to evaluate the risk of recession in the U.S. economy.

All investments involve risk, including loss of principal. Past performance is no guarantee of future results.

Any information, statement or opinion set forth herein is general in nature, is not directed to or based on the financial situation or needs of any particular investor, and does not constitute, and should not be construed as, investment advice, forecast of future events, a guarantee of future results, or a recommendation with respect to any particular security or investment strategy or type of retirement account. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies should consult their financial professional.

Resources

Anatomy of a Recession Presentation

Anatomy of a Recession Presentation

View the latest comprehensive slide deck.

Anatomy of a Recession Presentation – Short Version

Anatomy of a Recession Presentation – Short Version

Take a look at the latest abridged Economic and Market Outlook slide deck.

Insights