How economists (and TikTok) know if a recession is coming

Summary

Planet Money: How Economists (and TikTok) Know If a Recession Is Coming

Released on May 21, 2025 by NPR's Planet Money

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Introduction: The Intersection of Social Media and Economic Indicators

In the latest episode of Planet Money, hosts Kenny Malone and Keith Romer delve into the intriguing convergence of social media trends and traditional economic indicators to assess the looming threat of a recession. Tapping into the widespread discourse on platforms like TikTok, the episode examines both the playful and serious methods through which individuals and experts gauge economic downturns.

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Social Media's Take on Recession Indicators

Timestamp: 00:33 - 02:32

Kenny Malone and Keith Romer kick off the discussion by highlighting the surge in economic conversations on social media platforms. Keith observes, “It has been an unusual last few months for economics watchers on social media,” (00:33). They humorously explore TikTok's novel recession indicators, such as restaurant menu changes and cultural phenomena:

1. Five Guys' Introductory Combo Meal: TikTok user "Simply Simone" interprets Five Guys launching a value meal as a red flag, signaling economic strain (01:12). Claudia Sahm playfully adds, “Is getting so bad out here” (01:14).

2. Bar Snack Selections: Elisha Berman notes that the presence of inexpensive snacks like wasabi peas at bars could indicate a recession (01:37).

3. Alex Earl's 'Babysitter Bun' at Coachella: Another TikTok trend suggests that a messy hairstyle, dubbed the "babysitter bun," reflects economic hardships, as explained by Elisha Berman (01:58).

These lighthearted indicators serve as a cultural mirror, reflecting public sentiment and economic anxiety through everyday trends.

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Traditional Economic Indicators: The SAHM Rule and the Yield Curve

Timestamp: 04:27 - 16:35

Transitioning from memes to metrics, the hosts introduce established economic indicators that economists rely on:

1. The SAHM Rule (Claudia Sahm):

   • Origin: Developed by economist Claudia Sahm in 2019 while at the Federal Reserve, the SAHM (Sahm Rule) is a robust indicator based on unemployment rate changes.
   • Mechanism: It triggers a recession alert when the three-month rolling average of unemployment increases by at least 0.5% compared to the previous 12 months (08:36).
   • Current Status: Sahm confirms, “the SAHM rule says we are not in a recession” (10:29), providing a measure of economic stability despite fluctuating market conditions.

   Notable Quote: Claudia Sahm reflects on the personal impact of her indicator, saying, “My phone blows up at the worst of times” (10:52).

2. The Yield Curve (Menzie Chinn):

   • Definition: The yield curve plots interest rates of U.S. Treasury securities across different maturities. Normally, longer-term rates are higher than short-term ones.
   • Inversion as a Predictor: An inverted yield curve, where short-term rates exceed long-term rates, has historically preceded recessions. Menzie Chinn explains its significance, stating, “It signals a recession” (12:20).
   • Current Analysis: Presently, the yield curve is partially inverted, suggesting a 22% probability of a recession within the next year, which is above the typical 10-15% threshold but not alarmingly high (15:16).

   Notable Quote: Menzie Chinn emphasizes the market's collective intelligence, “the market's better than an individual forecaster” (13:44).

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Comprehensive Measures: The Leading Economic Index (LEI)

Timestamp: 16:35 - 23:05

The discussion advances to the Leading Economic Index (LEI), a composite metric by the Conference Board encompassing ten diverse economic indicators:

• Components: Includes new building permits, manufacturing orders, consumer sentiment, S&P 500 performance, yield curve, and unemployment claims (18:56).

• 3D Rule: Justina Jabinska Lamonica introduces the "3D Rule" for LEI:

  • Duration: The length of the index's decline.
  • Depth: The extent of the drop.
  • Diffusion: The number of components experiencing decline (20:40).

  Notable Quote: Justina explains, “It gives us a fuller picture that the weaknesses [are] widespread components” (21:22).

• Current Evaluation: As of April, recent data incorporated reflects economic turbulence from trade tensions, but overall LEI remains stable, not signaling an imminent recession (23:05).

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Conclusion: Balancing Meme Culture with Economic Reality

Timestamp: 23:05 - 25:17

Wrapping up, Malone and Romer juxtapose social media's playful recession markers with serious economic indicators. While TikTok trends like the "babysitter bun" offer a cultural lens on economic fears, traditional indicators like the SAHM Rule, yield curve, and LEI provide grounded assessments.

Claudia Sahm humorously reconciles the two worlds, affirming the current non-recession status while encouraging responsible spending, “Please do buy new underwear” (25:04). The episode underscores the importance of understanding both the lighthearted and technical facets of economic forecasting, ultimately guiding listeners to a nuanced comprehension of potential economic shifts.

Final Notable Quote: Keith Romer advises, “But for real men buy new underwear” (25:04), blending economic advice with humor.

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Key Takeaways

• Multifaceted Indicators: Recession forecasting employs both traditional metrics and cultural signals, each offering unique insights.
• Current Economic Climate: As of May 2025, established indicators suggest the U.S. economy is stable, with no imminent recession predicted.
• Role of Collective Sentiment: Social media trends, while not scientifically rigorous, reflect societal anxieties and can complement formal economic analyses.

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Credits

Produced by James Sneed, edited by Marianne McCune, fact-checked by Sarah McClure, and engineered by Sina Lofredo. Executive Producer Alex Goldmark.

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For more in-depth analyses and economic insights, subscribe to Planet Money+ for sponsor-free episodes, exclusive content, and more.

Transcript

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[Kenny Malone]

This is Planet Money from NPR.

[Keith Romer]

It has been an unusual last few months for economics watchers on social media.

[Kenny Malone]

Yeah, if you, if you've been the Tiktokin and the Snapchatting and the Instagramming.

[Keith Romer]

Blue skying, that's what they say. They say all those as verbs.

[Kenny Malone]

Perhaps you have noticed a trend friends.

[Keith Romer]

Suddenly something that we here at Planet Money are thinking about all the time is, is kind of having a viral moment. Recession indicators.

[Kenny Malone]

Oh yeah. Allow us a quick tour through TikTok to demonstrate. Example one. When the restaurant Five Guys, you know, burgers and fries announced it was testing out a combo meal, a value meal really for the first time ever, child.

[Claudia Sahm]

Is getting so bad out here.

[Keith Romer]

That is a recession indicator, says TikTok user the Simply Simone Little burger, little.

[Claudia Sahm]

Fry and I believe a small drink which honestly it's basically a kid's meal baby. You know it's bad when five, five guys is actually rolling out combo me.

[Kenny Malone]

Now five guys did tell us little does not mean kids size. But like whatever, you get the idea.

[Keith Romer]

Example number two comes from TikTok user Bryce Gruber.

[Elisha Berman]

Recession.

[Kenny Malone]

I can tell you if there's going.

[Elisha Berman]

To be a recession if you go to the bar and there are like little dishes of wasabi peas out recession.

[Keith Romer]

You'Re presumably because those I guess are relatively cheap as bar snacks go, is the indicator. Yeah.

[Elisha Berman]

And example 3 no you don't understand. Alex Earl's bun at Coachella is a recession indicator.

[Kenny Malone]

Oh correct. TikTok user Elisha Berman. I did not understand and googled every part of this. So social media influencer Alex Earl, typically very put together hair situation, went to California music festival Coachella wearing very messy hair situation called babysitter bun.

[Elisha Berman]

There are only three times where it's appropriate to wear this bun. One is you just throw up in the bathroom at the club. Two is you're a literal babysitter, hence the name the babysitter bun. And three is when you can't afford to get your roots done so you tie your hair up in a messy bun to hide the fact that you have a bad haircut and three inch roots.

[Kenny Malone]

Look, if lots of people do suddenly want to talk or even joke about recession indicators. We are here for that.

[Keith Romer]

The last few months have been this economic roller coaster. Tariffs were up, then tariffs were down, the stock markets were down, then they were back up. There were trade wars, then the trade wars were off and then they're back on. People are just unsure what to of all this and if they want to work through that anxiety by hunting for recession indicators, we at Planet Money are here to help. Hello and welcome to Planet Money. I'm Keith Romer.

[Kenny Malone]

And I'm Kenny Malone. Today on the show, the recession indicators.

[Keith Romer]

And not just the TikTok joke recession indicators, but the wonky indicators economists look at when they are trying to figure out are we in a recession? Will we be in a recession soon?

[Kenny Malone]

Yes. You know the stuff you need to know to fully unspool the macroeconomic implications of the babysitter bun.

[Elisha Berman]

We are all hanging on by a thread financially and this bun is the scissor that's going to cut us all loose.

[Keith Romer]

This message comes from Amica Insurance. As Amica says, empathy is our best policy.

[Kenny Malone]

Whether you're seeking auto, home or life coverage, they'll work with you to choose the policy that best serves you and your family.

[Keith Romer]

Discover how Ameca can help protect what matters most to you today. Go to ameca.com and get a quote today.

[Advertiser]

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[Keith Romer]

There is no perfect recession indicator. There's no data points that economists, or tiktokers for that matter have found to perfectly 100% of the time predict when we are going into a recession or even when we are in a recession.

[Kenny Malone]

And also for that matter, there's no official definition of recession. Generally speaking, you'll hear that a recession is when the U.S. economy contracts for two straight quarters. But the reality is an official group of economists get to make the recession call, right?

[Keith Romer]

This is the business cycle dating committee at the National Bureau of Economic Research. Rolls off the tongue.

[Kenny Malone]

I always think that it's a business cycle committee that is like dating each other, but that's not what it is.

[Keith Romer]

I think quite the opposite. What they do, right? They look at boatloads of data and then well after the fact determine. Ah yes, we were in fact in a recession starting however long ago.

[Kenny Malone]

They are the official recession influencers, if you will. Thoughtful, thorough. They are months behind the news to some degree. Sort of the exact opposite of, you know, real social media influencers.

[Keith Romer]

And today we are going to take those two worlds and we are going to smash them together. The memes and the economics.

[Kenny Malone]

The meme conics, the meme oconics, meme anomics. Yep.

[Keith Romer]

Our mission is to go find out what recession indicators economists take seriously and see what those say.

[Kenny Malone]

But also, are you familiar with the hip hop artist Flava Flav?

[Claudia Sahm]

I've heard the name.

[Keith Romer]

This is economist Claudia Somm.

[Kenny Malone]

Famously wore clocks around his neck.

[Claudia Sahm]

Oh, okay.

[Kenny Malone]

Some astute viewer has noticed in a recent video his clock seems to have shrunk. Recession indicator thoughts?

[Claudia Sahm]

Sounds like a good one.

[Keith Romer]

There is a well documented list of what you might call alternative recession indicators. For example, the men's underwear index.

[Kenny Malone]

Uh huh. The, the idea here being that men will start pinching pennies by, by maybe not buying new skivvies leading up to a recession. So underwear sales, a leading indicator of recessions.

[Keith Romer]

Also there is something called the lipstick index.

[Kenny Malone]

The idea here is that lipstick sales will actually go up as economic times get worse because people will trade in expensive luxury items like fancy handbags or dresses for, for cheaper luxury items like a tube of lipstick.

[Claudia Sahm]

That idea of like, if it's, if it's a bad time and you're trading down and you're like watching what you spend your money on, there's that correlation. There's a story to that. Right.

[Kenny Malone]

So Claudia doesn't discount the lipstick index specifically, but these alternative measures are perhaps not the most robust recession detecting instruments at our disposal.

[Keith Romer]

Which brings us to why we called Claudia SAHM in the first place. Claudia has an entire recession indicator named after her. It's called the SAHM rule.

[Kenny Malone]

This dates back to 2019. Claudia was working at the Fed back then and was asked to join a group tasked with writing a book of policy recommendations.

[Claudia Sahm]

And it was all about how do we fight the next recession? How do we do it better?

[Keith Romer]

Because when there's a recession, it can take a long time for lawmakers to actually get together and help people. So this group was thinking through sort of automatic triggers. Like if the economic data does some particular thing, then this federal aid program would temporarily kick into gear.

[Claudia Sahm]

The theme of the book overall was how could we put a lot of the relief we do in, in recessions like stimulus checks, unemployment benefits, food stamps, how could we put that on autopilot?

[Kenny Malone]

And so Claudia's job was simply to look for patterns in the data that could in real time say basically like oh, oh wait, okay, if this particular whatever thing happens in the data, then we are almost certainly in a recession and that should be a sign to get people the help that they need.

[Claudia Sahm]

So I developed this indicator based on changes in the unemployment rate.

[Keith Romer]

The indicator works like this. When unemployment goes up by a certain amount, when a certain percentage of people become unemployed, then you can be almost certain that the U.S. is in a recession, even if the recession has not officially been declared yet.

[Kenny Malone]

Now the technical rule specifications are when the average of the three month rolling unemployment rate goes up by at least 0.5% compared to the 12 month low. But also look, it is completely okay to just remember when unemployment goes up by a certain amount. That's fine.

[Keith Romer]

So Claudia's working group, they published their book and there is a chapter with her unemployment rule.

[Claudia Sahm]

Yeah, I mean in the chapter it didn't have a name.

[Kenny Malone]

It did need a name.

[Claudia Sahm]

I showed up at the launch event for the book and it, the organizer started calling it the SOM rule and I was like panicking in the audience.

[Kenny Malone]

Why were you panicking?

[Claudia Sahm]

I don't know, it doesn't, well it just, I was just expressing some, a pattern in the data. Like I didn't make the unemployment rate have these fluctuations. I don't know.

[Kenny Malone]

It's not my fault the unemployment rate goes down in a recession.

[Keith Romer]

Yes, she may not have wanted it, but all the same the SAHM rule was born.

[Kenny Malone]

And the SAHM rule works for a couple of reasons like number one, it identifies trends and not just the jittery ups and downs of month to month job numbers because it's using an average. So if the SOM rule triggers, you can be sure that unemployment is really going up. It's not a fluke.

[Keith Romer]

And then reason number two, employers, they are generally trying to do everything they can before they get to laying people off. So if you are seeing some rule levels of unemployment in the economy, there's a really good chance it is because businesses don't, don't have another choice and the economy is in a legitimately rough spot.

[Kenny Malone]

Okay, so then what does the SAM rule say about whether there is a recession right now?

[Claudia Sahm]

So currently the sum rule says we are not in a recession.

[Kenny Malone]

Woo hoo. That's right. It is okay to upsize your necklace clock. Men, it is okay to buy new underwear. Men, you can buy new underwear. Please do buy new underwear. Because in this moment, we are not in a recession according to the SAHM rule. What is, what is the best part and worst part of having a recession indicator named after you?

[Claudia Sahm]

My phone blows up at the worst of times. Right. I feel like I'm going to develop a recession indicator that's like, you know, tracking my press calls now. So. But it is, it's a real privilege to be able to, you know, try and explain the data, what's going on in the economy, what's, like, what are the risks we're facing.

[Keith Romer]

So SAHM rule says not in a recession. But we should note the rule is only about whether we are in a recession today. It does not attempt to forecast recessions.

[Kenny Malone]

No, no. For that, we turn to Professor Menzie Chin. He teaches economics at the University of Wisconsin, Madison, and has spent years studying our collective ability to predict recessions.

[Menzie Chinn]

I love talking about this. I talk about it with my students endlessly to, to their sadness, I'm sure.

[Kenny Malone]

Well, let me ask you this. Have you noticed that maybe your students are perhaps a bit more interested in talking about recession indicators? Absolutely. I would say possible recession indicator.

[Menzie Chinn]

Yes. I think you're right, actually.

[Keith Romer]

Now, Menzie has been in the recession forecasting game for decades. He was a part of both the Clinton and the George W. Bush administrations.

[Menzie Chinn]

I'd been working in the White House at a time when we had been thinking about the possibility of the onset of a recession. So, you know, that was a natural interest to say, well, what is a.

[Kenny Malone]

Good prediction predictor of recessions and the predictor of recessions. Menzie wound up studying the yield curve.

[Menzie Chinn]

Or the more specifically, the term spread.

[Keith Romer]

Ugh, the yield curve. Long time, planet money, heartthrob obsession.

[Kenny Malone]

Still our hearts, because the yield curve.

[Keith Romer]

Has mostly proven to be this very good recession predictor.

[Kenny Malone]

So the yield curve is simply a graph showing all of the different interest rates that you would get for all of the different kinds, different durations of US Debt. Right?

[Keith Romer]

So maybe grandma buys you a Treasury bond that's going to mature in 10 years. Right now, today, the US government will pay you about 4.5% interest to lock up your money for those 10 years.

[Kenny Malone]

But. But I could also buy a much shorter Treasury, a three month treasury, for example. I get less interest on that. Right now my money is locked up for less time. There's less risk. This makes sense.

[Keith Romer]

And this is generally the relationship between time and interest rates on US Government. Deb. Less time means less risk, which also means you get paid less interest.

[Kenny Malone]

However, there are strange moments when the shape of that relationship when the literal shape of the yield curve graph flips completely upside down. And in that situation, investors are worried about the near term and about the economy deteriorating doesn't cause a recession, but.

[Menzie Chinn]

It signals a recession. And so it's reflecting the fact that people are expecting a slowdown.

[Kenny Malone]

Is it that the wisdom of the crowds is smart and picks up on. Is that basically what's happening here?

[Menzie Chinn]

Yeah, I guess you would say on average, the market's better than an individual, individual forecaster.

[Keith Romer]

Now, Menzie was not the first person ever to discover that the yield curve was a good indicator, but he has done a ton of research into how well it works as a predictor of recessions in the US and in other countries around the world.

[Kenny Malone]

And in the US it has worked very well. Like over the last 50 years, whenever the yield curve inverted, a recession has followed within 18 months, every single time.

[Keith Romer]

Except.

[Kenny Malone]

Yeah, well, there's the recent exception a few years post Covid where it did invert, but there was no recession. But other than that, other than the last one, it has worked every single time. And to be fair, it has never missed a recession.

[Keith Romer]

So, okay, is the yield curve inverted right now?

[Kenny Malone]

That's, that's the big question.

[Keith Romer]

And the answer is it's partially inverted.

[Kenny Malone]

That's the weird answer.

[Keith Romer]

Yeah. If you look at the graph, interest rates over the next three years, those are inverted. They go down when they would normally go up. After that though, they start going up again.

[Kenny Malone]

And what that means is, I mean, well, this is where we get into probabilities. Very fun. Menzie has a model that compares basically all of those interest rates, the pairs of term spreads, and then it's able to spit out the odds that we will have a recession in the next year.

[Keith Romer]

And right now, Menzies model says the probability of a recession in the next year is about 22%.

[Menzie Chinn]

Yes.

[Kenny Malone]

Okay, so is that, that feels high? Is that high?

[Menzie Chinn]

Well, it's still below like a 50%.

[Keith Romer]

Threshold I would use for a comparison. Menzies says during low risk times, there's about a 10 to 15% chance of a recession. So 22% is higher than that, but it's still not a number that makes him think a recession is coming.

[Kenny Malone]

You know, the yield curve works as a predictor because the bond market is simply trillions of dollars of bets on the future of the US economy. And historically, the throng of humans placing that flood of bets has been good at, you know, picking up on vibes of trouble ahead.

[Keith Romer]

But that is not the only way to try to get a holistic view of what is happening. Some economists try to figure out whether a recession is coming by going out and collecting a lot of different measurements from around the economy.

[Kenny Malone]

Yes, and after the break, we have one final recession indicator that attempts to smash like all of the other indicators together. Well, I guess I should say maybe not all of the other indicators.

[Elisha Berman]

This bunch of signals to the world, I don't have a left to give.

[Kenny Malone]

Yeah, but that, that is.

[Elisha Berman]

After the break, I'm going to walk barefoot through a gas station, and I don't care what you have to say about it. We are all hanging on by a thread financially, and this bun is the scissors.

[Keith Romer]

As US Trade with China exploded, American manufacturing shriveled and workers struggled.

[Kenny Malone]

They saw their communities decline, and then the world changed very rapidly around them. Well, they kind of aged in place. Data doesn't speak in words, but that's.

[Keith Romer]

A very dramatic story. In a recent Planet Money bonus episode, we hear from the economist who helped tell that story and changed the way economics thinks about the costs of free trade. To hear it, sign up for NPR. Just go to plus.NPR.org Now, I'm not.

[Elisha Berman]

Someone who cares deeply about the comings and goings of Miss Alix Earle, but I do consider myself somewhat of an armchair anthropologist. And this bun is a cultural reset.

[Kenny Malone]

And we're back. And genuinely, I really could listen to Elisha Berman's breakdown of the return of the babysitter bun all day.

[Elisha Berman]

Only time will tell if the babysitter bun is truly a recession indicator. But I know a portentous omen when I see one. And guys, we are here.

[Kenny Malone]

And if messy bun's not portentous omen enough, allow us yet one final triangulating recession data point as discussed online, which, which I then felt compelled to discuss with our third and final economist, Justina Jabinska Lamonica. Now you stand up. Let me ask you this. Lady Gaga is yet again at the top of the Billboard charts. And so someone would flag that and say this is a recession indicator.

[Justina Jabinska Lamonica]

I don't really follow Lady Gaga, but why that would be. Why that would be an indicator. I'm just wondering.

[Keith Romer]

Well, we're going to let TikTok user genius girl alert explain this one.

[Claudia Sahm]

When we are good, we're totally fine.

[Keith Romer]

With like boring albums that are like.

[Claudia Sahm]

Quiet whisper pop, do, do, do, do, you know? But when we are in times of.

[Keith Romer]

Strife, we want like dance, we want.

[Claudia Sahm]

Brat, we want Beyonce, we want Lady.

[Keith Romer]

Gaga, we want recession pop.

[Kenny Malone]

Yeah, we wanted it during the 0809 Great Recession. Lady Gaga had two number one songs back then. Data point. Just saying.

[Justina Jabinska Lamonica]

I would have to check it though.

[Kenny Malone]

Yeah, possibly gonna guess Justina did not check on that.

[Keith Romer]

No, this is not one of the data points Justyna tracks for a living. She helps oversee something called the leading economic index or the lei.

[Kenny Malone]

This is a pretty famous economic indicator that is put out by a 100 year old nonprofit called the Conference Board. And LEI is an index made up of 10 different data sets from all over the economy.

[Keith Romer]

No recession pop in there, but it does include in no particular order, new building permits for houses, orders by manufacturers for goods and materials, a piece of the University of Michigan's famous consumer sentiment survey. The whole S&P 500 is included in there.

[Kenny Malone]

Crammed in there. Yes. And it is also looking at the yield curve and claims for unemployment insurance. So. So you know some of the same general ingredients that are in the two indicators we've already talked about here.

[Keith Romer]

And like those other indicators, LEI is at a very high success rate at calling recessions. And the way this has shown up in the past, Justyna says, is the graph of LEI will hit a peak and then start going down and then.

[Justina Jabinska Lamonica]

Few months later the economy will start declining as well.

[Kenny Malone]

Okay, and so let me just ask you, what does LEI tell us about the possibility of a recession in the near future?

[Justina Jabinska Lamonica]

So we usually look at the leading economic indicator from different perspectives.

[Kenny Malone]

And so you're not, you're not just going to give me an easy answer is what you're saying.

[Justina Jabinska Lamonica]

That's correct.

[Keith Romer]

So the lei, like any index, kind of bobs up and down. It's like a heart rate monitor for the economy. And so it's not just any time the index goes down. Some Justina is looking for something more like a plunge.

[Justina Jabinska Lamonica]

Usually when we're looking at the ability to predict the recession, we'll look at so called the 3D rule.

[Kenny Malone]

The 3D rule meaning looking at this graph with a, with sort of three different lenses usefully, all starting with the letter D. So we'll look at the.

[Justina Jabinska Lamonica]

Duration at the depth and the diffusion of the index.

[Keith Romer]

Duration and depth, those are simple enough. How far is the index dropping and for how long?

[Kenny Malone]

Diffusion is looking at how many of the 10 LEI components are involved with the drop. You know, is this drop contained to say housing and labor or are the problems diffused across the economy?

[Justina Jabinska Lamonica]

It gives us a fuller picture that the weaknesses widespread components.

[Kenny Malone]

It's like the different systems in the body you're seeing, are they all shutting down. Is it. Is it localized, et cetera.

[Justina Jabinska Lamonica]

That's a very good comparison.

[Keith Romer]

Correct.

[Kenny Malone]

And when we talked to Justina, the 3Ds, the LPI had come down a little in March. A little. The 3Ds were not freaking people out about a recession.

[Justina Jabinska Lamonica]

They did not signal anything as of March.

[Kenny Malone]

Great.

[Justina Jabinska Lamonica]

That was a. Yeah, that was a good.

[Kenny Malone]

Done.

[Justina Jabinska Lamonica]

Yeah, that was answered. That was a good, good reading.

[Keith Romer]

But when we talked to her, she was only working from that March data, which is to say data that did not include all of the economic chaos that went down in April with Trump announcing massive tariffs and the market tanking.

[Kenny Malone]

And then Trump putting a pause on some of the tariffs and then markets like, untanking.

[Keith Romer]

Yeah, April was a big month for confusing data. So Justina and all of us really were waiting to see the LP numbers that incorporated all of that. That was going to be a big deal.

[Justina Jabinska Lamonica]

Yeah, it might be. It might be pretty important.

[Keith Romer]

Correct.

[Kenny Malone]

Are we talking moving markets level? Like, do you have to go into lockdown before it releases?

[Justina Jabinska Lamonica]

You know what? Yeah, the LEI is market moving, so it's highly confidential. So there is. Would you calculate this?

[Kenny Malone]

Tell us. Do you want us to share it with our audience? Planet Money? We could all. No, bad idea. No. Okay.

[Justina Jabinska Lamonica]

No, we cannot do it.

[Keith Romer]

No, we have to wait like everyone else. But we do not have to wait any longer. The new numbers just came out from LEI and it says.

[Kenny Malone]

Oh, that's the sound of me rubbing my hands together in anticipation.

[Keith Romer]

Well, the LEI did go down a decent amount, but not enough to signal a recession.

[Kenny Malone]

Okay, that's great.

[Keith Romer]

So at the moment, these indicators, LEI yield curve, SOM rule, they are saying we are not in and probably not headed for a recession. But maybe this is a situation that the indicators are not calibrated for, because the hardest type of recession to predict is one that comes completely out of the blue from a sudden shock like what happened during the COVID pandemic.

[Kenny Malone]

Yeah, and these days, the shock that economists have been worried might happen to the economy is a full on global trade war, which many economists say would increase the odds of a recession considerably. So to some degree, the question really boils down to are we or are we not doing gigantic broad tariffs with all of the countries?

[Keith Romer]

Which means maybe social media could be the right place to go hunting for recession indicators after all. Not TikTok, not Instagram. The right place to look might be truth, Social, and the account of one real Donald Trump. The President's boasts about big new tariffs or big new trade deals.

[Kenny Malone]

Yeah, fair. But I am not, not going to keep following TikTok recession indicators from Elisha Berman.

[Elisha Berman]

After years and years and years of a slick back Bun Alix Earl finally said, you know what? I had it personally. I'm here for it. But I'm here to tell you that unfortunately, yes, it is a recession indicator.

[Keith Romer]

Today's episode of Planet Money was produced by James Sneed. It was edited by Marianne McCune, fact checked by Sarah McClure and engineered by Sina Lofredo. Alex Goldmark is our executive producer.

[Kenny Malone]

I'm Kenny Malone.

[Keith Romer]

And I'm Keith Romer. This is npr. Thanks for listening.

[Kenny Malone]

But for real men buy new underwear.

[Keith Romer]

Just swap em out. Swap em out, you know, and I.

[Kenny Malone]

Know skimp on something else. There are other places to pinch pennies.

[Keith Romer]

Just please. That's not the one.

[Kenny Malone]

Underwear is very important.

[Keith Romer]

It's really important.