Jobless claims continue to suggest weakness but no downturn

 

 - by New Deal democrat

We finally have some new data this week - the usual, jobless claims.

Initial claims declined -5,000 for the week, while the four week moving average declined 5,750. With the usual one week delay, continuing claims, on the other hand, rose 10,000 to a new 4.5+ year high of 1.965 million:

I can’t help but note that although the above numbers are seasonally adjusted, it is clear there is some residual unresolved post-pandemic seasonality nonetheless, as ever since the beginning of 2023 we have seen low numbers at the beginning of the year, rising through midyear, and then falling back down through the Holiday season.

On the YoY% change more useful for forecasting, initial claims were up 2.3%, the four week moving average up 1.3%, and continuing claims up 5.9%:

This continues to forecast weakness, but no recession. Interestingly, while there has been no substantial increase in new layoffs, those who are out of work are finding a more difficult time finding new jobs, as is shown by the increase in continuing claims in the last 8 weeks. Also, it is possible the recent lower figure for YoY% increases in new jobless claims might suggest a break in the trend of 5% higher +/-5% we’ve seen since last autumn, but I suspect it is more likely just noise.

Finally, here is an updated look at what this suggests for the unemployment rate going forward:

While most recently the unemployment rate was unchanged from 12 months previous, jobless claims suggest that this comparison should trend higher by about 0.2% or 0.3% in the next few months. A year ago the big increase in the unemployment rate was likely due to the torrent of new immigrants looking for work. Needless to say, this year that is very much not likely to be true any longer.

Why goods-producing employment is not flashing a danger signal for an economic downturn

 

 - by New Deal democrat

During this week’s drought of new economic data, let’s continue taking a look at some important information from last Friday’s employment report.

In every report, I break down my analysis first and foremost by looking at the leading indicators contained within the data. This is almost entirely confined to the goods-producing sector, and in particular manufacturing and construction. That’s because the goods sector is more volatile than the services sector. The former almost always turns down before the onset of a recession, while the latter in many cases sails right through.

Specifically, let me show you the last 40+ years of the absolute levels of employment in the goods-producing sector (blue) vs. services (red), broken up into three periods.

First, here is 1983-2000:

Here is 2000-2019:

And here is the post-pandemic period:

In each recession (except for COVID) since 1982, employment in the goods producing sector has turned down up to a year or more before the actual onset of the contraction, while at most the addition of jobs in the service producing sector slowed down. At present, as you can see from the last graph, while growth in the goods-producing sector has all but halted, it has not yet turned down.

Now let me break down employment within the goods-producing sector into manufacturing, construction, and the more leading residential construction sub-sectors, in addition to the entire goods-producing sector (red), first in absolute terms with all normed to 100 as of February 2023, which is when manufacturing employment peaked:

Recall that since the admission of China to regular trading status in 1999, a downturn in manufacturing has not been enough to drag the economy into a recession. You can see that construction employment, and in particular residential construction employment, which has risen almost 5% since then, has been responsible for the resilience in the overall sector.

Now let’s look at the same data YoY:

While the overall sector is up only 0.1%, manufacturing employment is down -0.7%, but construction employment is up 1.5%, and residential construction employment up 1.7%.

Now let’s take a look at the historical pre-pandemic YoY data. In the below graph, I have added/subtracted from each subsector’s YoY%age the June 2025 reading, so that each crosses the zero line when they correspond to the present:

Note that with the exception of the construction sector as a whole in 2001, all of the subsectors were lower YoY than their current readings at all times before each recession except for COVID. This tells us that there would have to be a further decline in manufacturing employment, and an actual significant turndown in residential construction employment (in 2001 overall construction employment stalled but did not decline) to create the conditions we have had just before all of the last three non-COVID recessions during the past 40 years.

This also hopefully helps explain why several important metrics, like the economically weighted ISM indexes are flashing a “recession watch,” I have not hoisted that flag for my overall forecast.

Two important danger signals in the June employment report

 

 - by New Deal democrat

This is Ben Casellman, Chief Economic Correspondent for The NY Times’s take on last Friday’s employment report:

I beg to differ. As I wrote Friday, underneath the headlines, this was a barely positive report - with some significant negatives. Let me point out a couple of the big ones today.

The headline was 147,000 jobs added, about average for the past year:

So it’s all good, right? 

Not so fast.

That 147,000 breaks down to 74,000 private jobs + 63,000 education (and 10,000 other). In the past six years, only 3 other times have public sector jobs (including education and all other government jobs) been such a large component of the total gain:

And the simple reason is that education employment is highly seasonal, with layoffs in May through July, and rehiring in August through October, as shown in the below graph where the non-seasonally adjusted numbers are in light blue, the seasonally adjusted ones in dark blue - and even then, I’ve had to divide the NSA numbers by 2 just to avoid the SA numbers being reduced to squiggles:

In June, “only” 271,000 education jobs were lost, which translated to a 63,000 SA gain. As one of Casselman’s correspondents pointed out, that may have to do with the fact that June started on a Sunday, so the reference week for the payrolls report was particularly early, and many school districts may not have ended their school year yet. In any event, regardless of the reason, that 63,000 gain is almost certainly going to be “paid back” next month.

So how bad really is a 74,000 private sector gain?

In the entire decade-long expansion before COVID, there were only 5 times that private sector jobs had fewer than 74,000 gains:

And there have only been 6 such times since the pandemic:

Now let’s zoom out a little bit. In the first 6 months of this year, 644,000 new private sector jobs have been created, plus 138,000 government jobs. Here’s how that compares with the entire 40 year history before COVID:

And here is how it compares post-pandemic:

In the entire 45 year period, *not once* has there been such anemic private sector growth in one half of the year except for during, just after, and the half year just before recessions.

Further, as shown above, private sector job growth tends to be slightly leading. That’s basically simple arithmetic, because total employment is a classic coincident indicator, while government employment lags. That’s because government entities generally have to balance their budgets, and for the first 3 to 12 months of a recession, they base hiring on the prior year’s tax receipts. Since during a recession, those receipts go down, governments have to make cuts that last up to several years after the recession is over.

Here’s the historical view of just public sector employment (the same as in the above) in two graphs:

And here is the post-pandemic view:

In each case government job losses continued for up to two years after the end of the recessions, and sometimes continued to increase during the early parts of the recession themselves. In other words, the early losses were concentrated in the private sector.

Put another way, when private sector employment gains wane, that is a warning signal. And private sector gains have waned so far this year.

I think that’s a little more than squint-worthy.

Before I finish, let me update another important graph. Below is nominal aggregate nonsupervisory payroll growth (red) compared with CPI (orange), together with real aggregate nonsupervisory payrolls (blue) through May (since we don’t have June’s CPI number yet), all normed to 100 as of March:

Nominally, aggregate nonsupervisory payrolls have only risen 0.3% since March, while consumer prices have risen that same percentage just through May. In other words, real aggregate payrolls look like they have been peaking this spring. And as I have pointed out many times in the past, a peak in real aggregate nonsupervisory payrolls has been an excellent metric for forecasting a downturn in real consumer spending, and with it, a recession.

So, far from being healthy or “resilient,” as Casselman contends, the June employment report had a number of important danger signals, only the most important of which I have detailed here.

Economically weighted ISM manufacturing + services indexes continue to warrant “recession watch”

 

 - by New Deal democrat

Last month the new orders components of the economically weighted ISM manufacturing and services indexes warranted the hoisting of a yellow flag “Recession Watch.” 

This month that continued.

To recap, because manufacturing is much less important to the economy than in the decades before the Millennium, the economically weighted average of the ISM services index (75%) as well as manufacturing (25%), especially over a three month period, has been much more accurate since 2000.

Last week the ISM manufacturing index for June came in at 49.0, and its three month average was 48.7. The new orders subindex came in at 46.4, and its three month average was 47.1. 

On Thursday the non-manufacturing index was reported at 54.2, and the new orders index at 51.3. The three month average for the headline index was 52.6, and for new orders 50.0.

Here is the manufacturing and services numbers for the past three years:

The economically weighted average for the month of June alone is 52.9, which is well into expansionary range. The average for the past three months is 51.6, which is still expansionary, but weakly so.

The new orders components of both indexes, however, are weaker:

The economically weighted average for June is 50.1, just barely into expansion. The three month average, however, is 49.3, up from 49.0 one month ago, but still contractionary. 

Note that while we came close last summer, at no point did either of the three month economically weighted averages tip into contraction, because the services component was only negative for one month.

In summary, the three month economically weighted average of new orders for the economy as a whole contracted for the second month in a row in June. Thus the “recession watch” caution remains in place. 

To reiterate my caveat from last month, treat the terms “watch” and “warning” the way you would for weather. A “watch” means that conditions are right, and the economy is at significantly heightened risk of a recession starting in the next few months. A “warning” would mean that a recession is likely, and almost imminently.

Last month I concluded this piece with the statement: “In the meantime, watch to see if the remaining short leading indicators to fall into place, most notably new jobless claims, consumer retail spending, employment in the goods-producing sectors, at very least a stalling in aggregate real payroll growth.” While some of those, notably new jobless claims and employment in goods-producing sectors, were positive last month; others - real retail spending, real spending on goods - did turn down, and aggregate real payrolls very likely have done so also, although we won’t know that for another week.

Weekly Indicators for June 30 - July 4 at Seeking Alpha

 

 - by New Deal democrat

My Weekly Indicators post is up at Seeking Alpha.

There were almost no changes to any of the high frequency indicators in any timeframe last week.

Despite that, below the surface, there has been a very gradual weakening of a number of important indicators in both the monthly and weekly data. 

The last monthly personal income and spending report was negative on both counts, and on Friday the employment report showed one of the weakest private sector gains in employment, outside of the pandemic lockdown months, in the past 15 years (more on which next week). The report was “saved” by seasonally adjusted state and local hiring gains, which probably had to do with the vagaries of the exact date June school years ended this year.

And in the high frequency data, railroad loads and consumer retail spending have continued to trend more or less slightly downward.

As usual, clicking over and reading will bring you up to the virtual moment as to the state of the economy, and reward me with a little pocket change for collecting annd organizing it for you.

The American Republic, July 4, 2025

 

 - by New Deal democrat

From the Declaration of Independence:

When in the Course of human events, it becomes necessary for one people to dissolve the political bonds which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the options of mankind requires that they should declare the causes which impel them to the separation.

The history of the present King … is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

He has refused his Assent to Laws… 

He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners …

He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance…

He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures…

For cutting off our Trade with all parts of the world…

For depriving us in many cases, of the benefits of Trial by Jury… 

For transporting us beyond Seas to be tried for pretended offences….

In the past year, the Supreme Court has declared:

That the President is a de facto King, above the law.

That the President’s abolition of birthright citizenship can stand unrestrained.

That the President may arrest and deport people to any third country willing to take them, without any due process.

Jobless claims remain neutral

 

 - by New Deal democrat

In addition to the jobs report, because this is Thursday we also got the latest jobless claims numbers.

To wit, initial claims declined -4,000 to 233,000, and the four week moving average declined -3,750 to 241,500. With the typical one week delay, continuing claims were unchanged at 1.964 million:

The more important for forecasting purposes YoY% changes for once included a positive, as initial claims were down -2.1%. The four week average was higher by 1.8%, and continuing claims were higher by 5.4%:

Because claims for just one week are noisy, this week’s report remains neutral. This is not recessionary, but does not indicate a strong economy either.

June jobs report weakness: not enough for “recession watch,” but not too far away either

 

 - by New Deal democrat



Even before the new Administration took office in Washington, my focus had been on whether the economy would have a “soft” or “hard” landing, i.e., recession. That has only intensified by the utter chaos of this Administration, particularly about tariffs. So my focus now is looking for “hard” vs.”soft” data indicating its impact.

While the headline numbers of this month’s employment report were positive to neutral, the underlying component were mainly weak to negative, including several very important ones.

Below is my in depth synopsis.

HEADLINES:

• 147,000 jobs added. Private sector jobs increased 74,000. Government jobs rose 73,000. The three month average increased +3,000 to +139,000, about average for this year, but above the lowest average last summer.
• Within government jobs, Federal jobs declined -7,000, while State jobs increased 47,000 and local jobs increased 33,000 (likely due to education).
• The pattern of downward revisions to previous months was reversed this month. April was revised upward by 11,000, and May by 5,000, for a net increase of 16,000.
• The alternate, and more volatile measure in the household report, rose by 93,000 jobs. On a YoY basis, this series increased 2,211,000 jobs, or an average of 184,000 monthly.
• The U3 unemployment rate declined -0.1% to 4.1%. Since the three month average is 4.167% vs. a low of 4.0% for the three month average in the past 12 months, or an increase of 0.1.67%, this means the “Sahm rule” is not in play.
• The U6 underemployment rate declined -0.1% to 7.7%, down -0.3% from its 3+year high in February.
• Further out on the spectrum, those who are not in the labor force but want a job now rose by 39,,000 to 6.030 million, its highest level since July 2021.

Leading employment indicators of a slowdown or recession

These are leading sectors for the economy overall, and help us gauge how much the post-pandemic employment boom is shading towards a downturn. This month they were mixed, but more negative than neutral or positive:

• the average manufacturing workweek, one of the 10 components of the Index of Leading Indicators, was unchanged at 41.0 hours, but remains down -0.6 hours from its 2021 peak of 41.6 hours.

• Manufacturing jobs decreased by -7,000. This series had been  in sharp decline, but it has generally leveled off in the past eight months. Nevertheless, with this month’s decline it set a 3 year low.
• Within that sector, motor vehicle manufacturing jobs declined 500.
• Truck driving, which had briefly rebounded, declined another -2,700.
• Construction jobs increased another 15,000.
• Residential construction jobs, which are even more leading, declined -500 from last month’s post-pandemic high.
• Goods producing jobs as a whole increased 6,000 to another post-pandemic high. These jobs typically decline before any recession occurs. But on a YoY% basis, these jobs are only 0.1%, which is very anemic although not necesarily recessionary.

• Temporary jobs, which have declined by over -640,000 since late 2022, declilned again this month, by -2,600, close to their post-pandemic low set last October.
• the number of people unemployed for 5 weeks or fewer declined -210,000 to 2,241,000, vs. its 12 month high of 2,465,000 last August.

Wages of non-managerial workers

• Average Hourly Earnings for Production and Nonsupervisory Personnel increased $.09, or +0.2%, to $31.24, for a YoY gain of just under +3.9%, its lowest YoY% gain in 4 years. Nevertheless, this continues to be well above the 2.4% YoY inflation rate as of last month.

Aggregate hours and wages: 

• The index of aggregate hours worked for non-managerial workers declined -0.6%. This measure up only 0.6% YoY, the 5th lowest reading over the past two years.

• The index of aggregate payrolls for non-managerial workers declined -0.2%, and is up 4.5% YoY. With the exception of January 2024, this is the lowest gain in the past 4 years. Although this remains well above the YoY inflation rate, it has increased only 0.3% in the past three months, meaning it has almost certainly declined in real terms, although we won’t know that until the next CPI is released.

Other significant data:

• Professional and business employment declined another -7,400. These tend to be well-paying jobs. This series peaked in May 2023, bottomed in October 2024, and is up less than 0.3% since then. It remains lower YoY by -0.2%, which in the past 80+ years - until now - has almost *always* meant recession. This is vs.  last spring when it was down -0.9% YoY.
• The employment population ratio was unchanged at 59.7%, vs. 61.1% in February 2020.
• The Labor Force Participation Rate declined -0.1% to 62.3%, vs. 63.4% in February 2020.

SUMMARY

Last month I wrote that “Although the headline numbers were positive to neutral, this was about as poor a report as could be during an expansion.” If anything, under the hood this month was even weaker.

For the second month in a row, the only reason the unemployment and underemployment rates did not go up was that the labor force participation declined significantly. The employment/population ratio also declined. Further out on the spectrum, those not in the labor force but who want a job increased to the highest level in almost 4 years.

Additionally, most leading sectors declined, including total and auto manufacturing, trucking, temporary help, and residential construction. Professional and business employment also declined, as did government employment.

Perhaps even more ominous, both aggregate hours and aggregate payrolls outright declined this month, even before accounting for inflation. In other words, the American middle and working class as a whole almost certainly saw an absolute decline in their purchasing power last month - something that typically has happened a few months before a recession begins.

What saved this report from being even weaker was (1) state and local government jobs, mainly in education, which almost certainly involves residual unresolved post-pandemic seasonality; and (2) specialty and finishing construction trades, which tend to be later in the construction process. Additionally, the pattern of downward revisions to previous months was broken this month.

Finally, this report was of a pattern with last month’s personal spending report, which showed a decline in the purchases of goods in real terms. Indeed, if construction jobs had turned down, this report would probably have merited going on “recession watch.” We’re not quite there, but we’re not far away either.

JOLTS survey for May still consistent with “soft landing” scenario

 

 - by New Deal democrat

As promised, let me parse the JOLTS survey for May, which was reported yesterday. 

As a quick refresher, this survey decomposes the employment market into openings, hires, quits, and layoffs. In 2024 the data were most consistent with a “soft landing,” but the actions of the new Administration, especially on trade, have exacerbated the fear that this might transform into a “hard” landing, a/k/a a recession.

Yesterday was a good “soft landing” report.

To start, here are job openings, hires, and quits all normed to 100 as of just before the pandemic:

Openings are “soft” data and have generally trended higher going all the way back to the turn of the Millennium. They have remained above their pre-pandemic levels, and this month increased by 374,000 to 7.769 million. Voluntary quits also rose by +78,000 to 3.293 million. On the other hand, actual hires declined by -112,000 to 5.503 million. 

Both hires and quits remain below their pre-pandemic levels, but above their level through much of last year, consistent with a continuation of the “soft landing” scenario as shown in the below graph of the past 12 months:

Now let’s turn our attention to several components are slight leading indicators for jobless claims, unemployment and wage growth.

Recently one item of concern has been layoffs and discharges, which generally have averaged higher since last July. In May, they declined by -188,000 to 1.601 million, one of the three lowest readings since then, and about average since the beginning of 2023:

This is better than both the increase in the unemployment rate over the past year (red, right scale) to new levels in the past year, as well as the recent trends in new and continuing jobless claims (not shown), both of which typically follow with a short lag.

Finally, the quits rate (left scale) typically leads the YoY% change in average hourly wages for nonsupervisory workers (red, right scale):

In May the quits rate rose 0.1% to 2.1%, tied with its highest rate in the past 12 months. Although in the past few months the trend has been a slight improvement, this is still below any post-pandemic reading before last September. Nevertheless, the downshift that began late last summer has not yet been reflected in average hourly wages, which tend to follow with a lag. Thus this continues to suggest that wage growth will decelerate further on a YoY basis over the next few months.

The last few JOLTS reports have all been consistent with the “soft landing” scenario remaining intact through May. Tomorrow we will find out whether the June employment report continues to support this.

Construction spending continues contraction, amplifying yellow flag caution from manufacturing

 

 - by New Deal democrat

I concluded last month’s post on construction spending by writing “Putting this report together with this morning’s other report on manufacturing from ISM, it appears the goods-producing part of the economy as a whole is very slightly contracting. It will be interesting to see if this is reflected in a decline in goods-producing jobs in Friday’s report.”

If anything, this morning’s construction spending report suggests a contraction that is a little less “slight,” as total construction spending (blue in the graph below) declined -0.7%, while residential construction spending (red, right scale) declined -0.5%:

Further, since on a nominal basis both series peaked exactly 12 months ago, on a YoY basis as well as on an absolute basis from peak, they have declined -3.5% and -6.5%, respectively:

Adjusting by the cost of construction materials, which again rose last month, the declines from peak are -8.9% and -10.4%, respectively:

If construction spending has declined more severely from peak, and manufacturing is in contraction as well, that amplifies somewhat the conclusion that the entire goods-producing sector of the US economy is in a downturn. In which regard, here is the latest update to industrial (blue) and manufacturing (red) production, indicating slight declines from peaks several months ago:

In answer to the question posed at the top of this post, last month there was indeed a slight -5,000 decline in goods-producing jobs. On Thursday we will find out if that continues for a second month.

Preliminary economically weighted ISM average for June continues in “recession watch” territory

 

 - by New Deal democrat

As usual, we start out the month with reports on both manufacturing and construction. Ill post separately on construction. Additionally, the May JOLTS reports was posted, but I’ll discuss that tomorrow. So let’s start with the ISM manufacturing report, a recognized leading indicator for the past 60+ years, although of diminished importance since the turn of the Millennium (it was in deep contraction both in 2015-16 and again in 2022 without a recession occurring).

To recap briefly, any number below 50 indicates contraction. The ISM itself indicates that the number must be 42.5 or less to signal recession. For forecasting purposes, I use an economically weighted three month average of the manufacturing and non-manufacturing indexes, with a 25% and 75% weighting, respectively. After both reports were posted one month ago, I indicated they justified a “recession watch.” 

This morning’s report confirms that. While the headline number for June rose 0.5 to 49.0 (still contractionary), the more leading new orders subindex declined -1.2 to 46.4.

Here is a look at both the total index (gray) and new orders subindex (blue) for the past ten years:

Note that both remain better than they were in 2022-23.

Hare the last six months of both the headline (left column) and new orders (right) numbers:

JAN 50.9  55.1

FEB  50.3  48.6

MAR 49.0. 45.2

APR 48.7. 47.2

MAY 48.5. 47.6

JUN. 49.0. 46.4

The current three month average for the total index is 48.7, and for the new orders subindex 47.1. 

As I indicated above, for the economy as a whole the weighted index of manufacturing (25%) and non-manufacturing (75%) indexes is more important. In the non-manufacturing report, the average of the last two months for the headline and new orders numbers has been 51.8 and 49.4, respectively. While the economically weighted headline number remains slightly above 50, at 50.4, the new orders average is 49.0.

In short, pending the release on Thursday of the ISM non-manufacturing report, for the second month in a row the new orders average is forecasting economic contraction in the next few month. Which means that, as of today, the “recession watch” forecast signal continues in place.

Pay close attention to real personal spending on goods

 - by New Deal democrat

 This week data arrives in two batches: a smaller batch (ISM manufacturing and construction spending) tomorrow, and a huge tranche (nonfarm payrolls, jobless claims, ISM services, and factory orders) on Thursday. Which means I might take Wednesday off, and/or delay reporting on some of Thursday’s data until Friday.

In the meantime, let me take a deeper look at Friday’s report on personal spending. That’s because as I’ve written before, spending on goods turns down before spending on services. In fact, spending on services often sails right through recessions without ever turning down at all. Further, spending on goods tends to turn negative before the recession actually hits. And of course since consumer spending is roughly 70% of the economy, it also has a big impact on GDP.

First let me show you the historical YoY% change in real spending on goods (red) and services (blue), averaged quarterly to cut down on noise:

Except for very shallow recessions, real spending on goods has always turned negative YoY, whereas before COVID real spending on services only turned negative during the severe Great Recession. And since real spending on goods is much more volatile, if it is decelerating to a lower level than that on goods, it is a frequent harbinger of recession.

Now here is the post-pandemic look. I’ve broken this out monthly just because it is much easier to see what is going on:

Real spending on goods only turned negative YoY one year exactly after the large 2021 stimulus, which led to a lot of immediate spending on goods. Even with the big miss on Friday, it was still positive YoY by 2.5%.

But as I have often noted, a measure peaks or bottoms before the YoY measure turns positive or negative. Thus, where we have seasonally adjusted data, that is the better way to took for leading turning points.

Since real personal spending on goods and services is seasonally adjusted, let’s look at the % change in each on a quarterly basis. I’ve broken down the 60 years of data before the pandemic into 3 graphs so the important markers are easier to see.

Here is 1960-80:

1981-2000:

And 2001-2019:

Again, note that real spending on services rarely turns down, even during recessions, although usually its growth does declerate below 1% annualized during the quarter just preceding or starting the recession.

Further, if real spending on goods is positive, with exactly one exception in 60 years it either meant an expansion was ongoing, or we were close to the end of a recession.

More often than not, even a negative quarterly number for real spending on goods did not signal a recession either. But if we remove all such cases were quarterly real spending declined less than -1%, we get a much more reliable signal, albeit not perfect. About 50% of the time sharper downturns indicated an oncoming recession, and about 50% just a slowdown. If growth in real spending on services was also decelerating sharply, even if still positive, it almost always meant recession.

Now let’s look at the quarterly post-pandemic data, beginning with Q2 2021:

Although Q2 and Q3 in 2021 were negative, they were a reaction to the huge front-loading of spending in Q1 (which would have dwarfed all the other readings). Only one quarter - Q4 of 2022 - came in with a downturn of more than -1%, a false positive. Q3 and Q4 of 2024 again likely featured front-running. The payback was in Q1 of this year, when the quarterly increase for both goods and services was almost exactly 0.

Now here is the monthly look at the last year:

In the first two months of Q2, total real spending has declined by -0.8%, while services has been basically unchanged. If there is a further decline in June, based on the above discussion that would likely trigger a “recession watch” signal.