The Decision Analyst's Economic Index For October 2022 Indicates A Likely Recession

Arlington, Texas—The Decision Analyst U.S. Economic Index for October 2022 was 101, down 2 points from September 2022 (103) and down by 10 points from October 2021 (111). The Economic Index has, on average, trended down over the past 12 months. The Decision Analyst U.S. Economic Index tends to be a leading indicator of the overall U.S. economy by six to 12 months. Therefore, the U.S. Economic Index is suggesting a likely recession for the U.S. economy in the closing months of 2022 and into 2023. The past 20-year history of the Index is shown below.

“The decline in the Economic Index over the past 12 months has been driven by high inflation rates, particularly in energy, food, and housing costs. Inflation reduces consumers’ purchasing power and tends to weaken the economy. Labor shortages and rising wages are likewise a barrier to future economic growth. COVID—and especially long COVID—continue to act as economic depressants, but this effect is waning. Many sectors of the U.S. economy (and the world economy) continue to be impaired by supply-chain disruptions. The Russian invasion of Ukraine, of course, has also contributed to supply disruptions and to higher inflation rates. Recent actions by an aggressive Federal Reserve are pushing interest rates higher in the U.S. and worldwide. These higher interest rates will depress economic activity in the coming months,” said Jerry W. Thomas, President/CEO of Decision Analyst, “and will also raise the risk of financial crises, as the rising U.S. dollar undermines other currencies.”

“Consumers’ planned future purchases (see graphs below) indicate that consumer spending plans (roughly 70% of the U.S. economy) are starting to wane in major sectors of the economy. The graphs below show the percentages of U.S. households that say they are likely to make various types of purchases in the next 12 months. A quick look at the trend charts reveals that consumers’ spending plans are flat or declining across several major categories,” said Thomas.

Methodology

The Decision Analyst Economic Index is based on a monthly online survey of several thousand households balanced by gender, age, and geography. The scientific survey is conducted in the last 10 days of each month. The Economic Index is calculated from 9 different economic measurements using a sophisticated econometric model. The result is a snapshot of coming economic activity in each country surveyed, as seen through the eyes of representative consumers living in the respective countries.

Decision Analyst conducts its concurrent economic surveys each month in Argentina, Brazil, Canada, Chile, Colombia, France, Germany, India, Italy, Mexico, Peru, the Russian Federation, Spain, and the United States. Whenever the Decision Analyst Economic Index is greater than 110, it tends to signal an expanding economy. An Index value of 90 to 110 suggests a no-growth or slow-growth economy, and near or below 90 generally indicates economic contraction. These guidelines vary by country, however.

About Decision Analyst

Decision Analyst (www.decisionanalyst.com) is a global marketing research and analytical consulting firm specializing in strategy research, new product development, advertising testing, and advanced modeling for marketing decision optimization. For over 40 years, the firm has delivered competitive advantage to clients throughout the world in consumer-packaged goods, telecommunications, retail, technology, medical, and automotive industries.

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