Which way is the economy turning?

A first-draft write-up — the data and charts are real; the words are a starting point to make your own.

The unemployment rate tells you where the economy was. To see where it's going — in either direction — you need leading indicators: the series that bend before output does. This piece pulls together five of the most useful, for the world's major economies.

The headline signal: the Composite Leading Indicator

The OECD's CLI is purpose-built for this. It bundles new orders, confidence, financial and other forward-looking inputs into one index, amplitude-adjusted so that 100 is the long-run trend. The rule of thumb is simple and symmetric: above 100 and rising means expansion; a peak above 100 warns of a slowdown; a trough below 100 that turns up signals recovery. Because it's standardized, you can lay the US, Canada, Germany, Japan and China on the same axis and compare who's turning first.

Confidence, split in two

The next two views separate business and consumer confidence. They don't always move together, and the gaps are informative — businesses often sense a turn in orders before households feel it in their paycheques. Both are symmetric: they sag before downturns and lift before recoveries.

The two US specialists

The last two views are US-only, because that's where the data is deep enough to trust:

• The yield curve (10yr − 3mo). When it drops below the green line — when short rates exceed long rates — it has inverted, the most reliable recession warning in US data. Watch it dip below zero before each of the last several recessions, then climb back as recovery nears.
• Recession probability. A model-based estimate of the chance the US economy is currently in recession. It's a coincident-to-lagging read rather than a leading one — useful for confirming a turn the leading indicators flagged earlier.

No single indicator calls every turn. The point of a dashboard isn't one perfect signal — it's watching several bend the same way at once.

The honest caveats

• Leading indicators lead — until they don't. They give false signals; a dip that doesn't become a recession is common. Direction and breadth matter more than any single month.
• The CLI is revised. The most recent months get updated as more data arrives, so the very end of each line is provisional.
• This is a monitoring tool, not a forecast. It shows what the leading series are doing; turning it into a probability of what happens next is a separate, harder modelling job.