As expected, the probability of a U.S. economic recession began to diminish rapidly after the Federal Reserve implemented a half-point rate cut at its mid-September 2024 meetings.

The change follows the recession odds setting a "triple-top" pattern, in which the probability of recession peaked for the third time after breaching a 70% threshold. The probability of recession is now rapidly falling.

That downward direction is likely to continue as the Federal Reserve is expected to deliver a quarter point reduction in the Federal Funds Rate at the conclusion of its Federal Open Market Committee meetings on Thursday, 7 November 2024. Those meetings start on 6 November 2024, which is why we're providing this update at this time. We're showing a portion of the analysis Fed officials have available as they weigh how to set the level of the Federal Funds Rate.

The following chart tracking the probability of recession since 30 April 1983, the period from July 2024 through September 2025 represents the most likely period in which the NBER will say the U.S. economy peaked before beginning a period of contraction. And even though the probability of recession someday being found to have started sometime in the next twelve months is now falling, those odds remain elevated.

The current probability of a recession being officially determined to have begun between 1 November 2024 and 1 November 2025 is 64.8%. The featured chart shows that probability 'pushed out' to the end of the period for which the recession forecast applies.

Analyst's Notes

The recession probability presented here is based on the Federal Reserve Board's yield curve-based recession forecasting model, which factors in the one-quarter average spread between the 10-year and 3-month constant maturity U.S. Treasuries and the corresponding one-quarter average level of the Federal Funds Rate. If you'd like to do that math using the latest data available to anticipate where the Recession Probability Track is heading, we have provided a tool to make it easy to do.

We will continue following the Federal Reserve's Open Market Committee's meeting schedule in providing updates for the Recession Probability Track until the U.S. Treasury yield curve is no longer inverted and the future recession odds retreat below a 20% threshold. We're following how this forecasting method performs.

Previously on Political Calculations

We started this new recession watch series on 18 October 2022, coinciding with the inversion of the 10-Year and 3-Month constant maturity U.S. Treasuries. Here are all the posts-to-date on that topic in reverse chronological order, including this one....

• U.S. Recession Odds Fall with Fed Rate Cut, But Are Still Elevated
• Triple Top Pattern Locking In for U.S. Recession Probability
• Triple Top Developing for U.S. Recession Probability
• U.S. Probability of Recession in Next Twelve Months Hovers Near 70%
• Recession Probability Falls After Hitting Double-Top
• U.S. Recession Probability Nears a Double-Top
• Probability of U.S. Recession Resurges to Nearly 75%
• U.S. Recession Odds Recede to Two Out of Three Chance in 2024
• U.S. Recession Probability Continues Receding on All Hallow's Eve
• U.S. Recession Probability Starts to Recede
• Probability of Recession Starting in Next 12 Months Breaches 80%
• U.S. Recession Probability on Track to Rise Past 80%
• U.S. Recession Probability Reaches 67%
• U.S. Recession Probability Shoots Over 50% on Way to 60%
• Recession Probability Nearing 50%
• Recession Probability Ratchets Up to Better Than 1-in-6
• U.S. Recession Odds Rise Above 1-in-10
• The Return of the Recession Probability Track

Image Credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Federal Reserve official skiing down a mountain. The mountain has three peaks".

October 2024 proved to be a net negative month for the dividend paying firms of the U.S. stock market.

Although we've seen the positive development of eleven fewer firms announcing they will either cut or suspend their dividends when compared with the same month a year earlier, this improvement in unfavorable dividend actions has coincided with the negative development of 29 fewer firms declaring they will increase their dividends.

That's the difference that leads us to describe October 2024 as a negative month for dividend paying firms. The single number that describes the month is -18, which is based on 11 fewer firms announcing dividend decreases paired with 29 fewer firms declaring they will increase their cash dividend payouts.

All the month's favorable and unfavorable changes are tallied up in the following table.

The following chart visualizes the monthly counts of dividend increases and decreases from January 2004 through October 2024.

With two of the past three months having had a negative number for the net year-over-year change of favorable and unfavorable dividend actions, it looks like we can finally answer the question we asked after reviewing July 2024's dividend numbers of how long the positive trend we noted at that time would last. That trend no longer exists.

References

Standard and Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. Accessed 1 November 2024.

Image credit: Dividends by Nick Youngson on PicPedia. Creative Commons Creative Commons 3 - CC BY-SA 3.0.

It's a strange time for the stock market. It's almost like one of Aesop's fables or a fairy tale, except featuring Wall Street's bulls and bears, in which something the bear has done has affected the trajectory of stock prices.

The S&P 500 (Index: SPX) pulled back as the prospect for faster rate cuts dimmed during the final trading week of October 2024. The index fell some 1.3% to end the week at 5,728.80.

The CME Group's FedWatch Tool anticipates a 0.25% rate cut on 7 November 2024. After that however, expectations for future rate cuts have changed. Instead of additional 0.25% cuts at 6-to-12-week intervals, the tool now projects quarter point rate cuts will take place at an average of 12-to-18-week intervals, a much slower pace.

That change in outlook hammered stocks that had recently rallied on the expectation of interest rates falling at a faster pace, which in turn pulled the trajectory of the S&P 500 into the lower portion of the redzone forecast range on the alternative futures chart. Here's the latest update of that chart, which also shows we'll reach the end of the redzone forecast range later this week.

Meanwhile, other stuff happened during the trading week that was. Here are the week's marking-moving headlines, which seasoned investors will recognize have little to nothing to do with the U.S. elections in this upcoming week.

Monday, 28 October 2024

• Signs and portents for the U.S. economy:
• Oil slips nearly $4 a barrel after Israel shows restraint in strikes on Iran
• Bigger trouble, bailouts developing in China:
• Some companies change tack in China with no recovery in sight
• China launches new lending tool before year-end loan expiry
• BOJ minions get a political problem to deal with as they are told to do nothing with interest rates:
• Japan's political shakeup complicates BOJ, fiscal policy outlook
• BOJ on quest for better communication as more rate hikes loom
• Japan's kingmaker opposition warns against early BOJ rate hike
• ECB minions thinking they don't need to hurry to deliver more rate cuts:
• No urgency for ECB to speed up policy easing, Wunsch says
• Dow, S&P, Nasdaq end higher, with Big Tech earnings, payrolls data on the horizon

Tuesday, 29 October 2024

• Signs and portents for the U.S. economy:
• Oil prices climb as US reserve bid lends support
• US seeks up to 3 million barrels of oil for emergency reserve
• Fed minions being sent message to keep rate cuts going:
• Fed's rate cut revives small business optimism and plans to borrow
• Deteriorating office loans stress US regional banks' CRE portfolios
• Federal Reserve to cut rates by 25 basis points at next two meetings: Reuters poll
• Bigger trouble, stimulus developing in China:
• China's factory activity likely contracted in Oct for a sixth month - Reuters poll
• Exclusive: China considers over $1.4 trillion in extra debt over next few years
• BOJ minions getting mixed picture of Japan's economy:
• Japan continues to see moderate economic recovery, cuts factory output view
• Bigger inflation developing in Eurozone:
• More companies planning price hikes in Germany, survey finds
• Nasdaq notches record close ahead of Alphabet results; S&P rises while Dow slips
• Nasdaq hits record high as Alphabet earnings beat estimates

Wednesday, 30 October 2024

• Signs and portents for the U.S. economy:
• US shippers avoid East Coast ports on risk of second strike
• Oil rises on US stockpiles drawdown, OPEC+ mulls output hike delay
• US 30-year mortgage rate surges to 6.73%, highest since July
• Bigger stimulus developing in China:
• China's looming fiscal package set to stabilise rather than boost growth
• China stimulus should go hand in hand with reforms, ex c.bank adviser says
• Not as bad as feared, but trouble still developing in Eurozone:
• Euro zone grows quicker than expected but outlook remains weak
• French economy expanded 0.4% in Q3 with Paris Olympics, INSEE says
• ECB minions ready to declare victory over Eurozone inflation, say they don't need to stimulate Eurozone economy any more:
• ECB's inflation victory not far off, Nagel says
• ECB's Lagarde: inflation should stabilise at 2% target in 2025
• ECB does not need to stimulate economy, Schnabel says
• Wall Street fails to hold on to gains, ends lower ahead of Microsoft, Meta earnings

Thursday, 31 October 2024

• Signs and portents for the U.S. economy:
• Oil gains more than $2 after settlement on reports Iran preparing Israel attack
• US oil output hits monthly record high in August, agency says
• Fed minions expected to deliver two more rate cuts in 2024:
• Fed seen on track to cut rates next week and in December
• Mixed growth signs, more stimulus developing in China:
• China's manufacturing activity expands for the first time in six months
• China's central bank injects cash via new outright reverse repos in October
• Bigger trouble developing in Japan, Asia:
• Japan's factory declines accelerate as demand sags, PMI shows
• Asia's factory activity stagnates, taking shine off rebound in China
• Japan's economic growth likely cooled sharply in Q3 in test for BOJ policy: Reuters poll
• Credibility-deficient BOJ minions boldly do nothing with interest rates:
• BOJ keeps policy steady, leaves door open for near-term rate hike
• BOJ Governor Ueda's comments at news conference
• ECB minions seeing more inflation in Eurozone, think their policies may push inflation too low:
• Euro zone inflation picks up, bolstering case for caution in rate cuts
• ECB's Panetta warns rate policy mustn't push inflation too low
• Wall Street sells off on last day of October, as Microsoft, Meta rout tech stocks

Friday, 1 November 2024

• Signs and portents for the U.S. economy:
• US labor market staggers after blow from hurricanes, strikes
• Oil climbs 2% on reports of Iran preparing strike on Israel
• US manufacturing drops to 15-month low in October
• China buying fewer U.S. farm goods:
• China pivot from US farm imports bolsters it against trade war risks
• BOJ minions told to keep doing nothing for another six months despite warnings of factors that will boost inflation:
• BOJ should wait at least six months for rate hike, says opposition kingmaker
• Japan's rising minimum wage likely to push up inflation, BOJ says
• Japan must avoid issuing debt to fund fresh spending, IMF says
• Wall Street notches first two-week losing streak since August ahead of election, Fed
• Wall St closes higher as Amazon's gains offset weak job growth
• Amazon's improving retail sales boost Q3 profit, revenue beats estimates

The Atlanta Fed's GDPNow tool's projection of the real GDP growth rate for the current quarter of 2024-Q3 plunged to +2.3% from the previous week's forecast of +3.4% growth.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon showing a smiling bear taking a box away from a sad Wall Street Bull. The box has the words 'Future Rate Cuts' written on it".

Motio Research's initial estimate of U.S. median household income in September 2024 is $82,173. This figure is $745 (0.9%) higher than the firm's initial estimate of median household income in August 2024 of $81,562.

Motio Research's estimates are based on income data collected by the U.S. Census Bureau as part of its monthly Current Population Survey. The firm adjusts its monthly estimates to account for the effects of seasonality and inflation in its data, presenting its results in the form of an index with the median household income of January 2010 assigned a value of 100. The initial value of the firm's U.S. Real Median Household Income Index for March 2024 is 117.4.

The following screenshot of Motio Research's interactive chart shows how this index has changed from January 2010 through September 2024:

Analyst's Notes

Political Calculations produces estimates of median household income that complement the monthly survey-based estimates produced by Motio Research. Our initial estimate of median household income in September 2024 based upon our alternate methodology is $82,173, which is $356 (0.4%) higher than our initial estimate of $81,817 for August 2024. Our median household income estimate is $134 (0.2%) less than Motio Research's September 2024 estimate.

The latest update to Political Calculations' chart tracking Median Household Income in the 21st Century shows the nominal (red) and inflation-adjusted (blue) trends for median household income in the United States from January 2000 through August 2024. The inflation-adjusted figures are presented in terms of constant September 2024 U.S. dollars and are not seasonally adjusted, unlike the data used to produce Motio Research's Household Income index:

Political Calculations' monthly median household income estimates are derived from the Bureau of Economic Analysis' monthly aggregate wage and salary estimates for the U.S. population. For September 2024, this data includes small revisions to previously reported data for July 2024 (+0.057%) and August 2024 (+0.124%).

References

U.S. Bureau of Economic Analysis. Table 2.6. Personal Income and Its Disposition, Monthly, Personal Income and Outlays, Not Seasonally Adjusted, Monthly, Middle of Month. Population. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 31 October 2024. Accessed: 31 October 2024.

U.S. Bureau of Economic Analysis. Table 2.6. Personal Income and Its Disposition, Monthly, Personal Income and Outlays, Not Seasonally Adjusted, Monthly, Middle of Month. Compensation of Employees, Received: Wage and Salary Disbursements. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 31 October 2024. Accessed: 31 October 2024.

U.S. Department of Labor Bureau of Labor Statistics. Consumer Price Index, All Urban Consumers - (CPI-U), U.S. City Average, All Items, 1982-84=100. Not seasonally adjusted. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 10 October 2024. Accessed: 10 October 2024.

Image credit: U.S. Census Bureau. We modified the public domain image to make it more generally applicable beyond reporting the median household income from 2022.

Halloween is once again upon us, which means its time to honor an old tradition here at Political Calculations, in which we seek out the scariest furniture on which to sit. Because what can be more unsettling when all you want to do is put yourself at ease in your easy chair, but your chair has other ideas....

This year, we're turning to a chair known for its classic design, but which, on first glance, may make you doubt whether it is really there. Meet the Ghost Chair!

Ghost chairs like this have a relatively short history. They have only been around since 2002, when designer Philippe Starck worked out how to fabricate his version of an 18th-century Louis XVI chair from a single piece of transparent polycarbonate. Although inspired by antique furniture, it really is a marvel of modern technology:

One of the most magnificent features of the Ghost Chair is not immediately apparent to the eye—it’s how it’s made. The iconic chair required significant technical innovation to come to life, as it’s made of a transparent injection-molded polycarbonate, which uses a single mold. This means that the entire chair is a single piece—no screws, upholstery, or separate arms and legs. Because it’s plastic, and because there are no joints (which could freeze or crack in the rain or cold), the Ghost Chair performs particularly well outdoors, making it a go-to for elevated outdoor venues.

A far cry from its stuffy (and heavy) ancestral armchair, the Louis Ghost Chair is also remarkably lightweight, and easy to lift and move around. Better yet, it’s stackable (up to six chairs high).

Let us assure you that ghost chairs are a real product that you can really buy and not something you might find lurking in an odd corner of Al's House of Lucite. The seemingly spectral chair we've featured in the photo is the EMMA + OLIVER Oval Back Ghost Chair, which you can buy this very Halloween at Amazon. It is one of several different models of transparent chairs featuring classic styling that you can use to meet your indoor and outdoor seating needs.

Ghost chairs are an example of outside-the-box thinking for how to furnish a modern home. But if they are not unsettling enough for you on this Hallow's Eve, there are other options to consider. Here are our previous posts featuring less transparent, but perhaps more terrifying chairs....

• Markets in Everything: Scary Chairs to Sit Upon
• Happy Halloween! Now, Have a Seat....
• Furnishings Fit for Halloween
• Chairs of Terror
• Cathisophobia