Top economist Mark Zandi says the indicator that has called every recession since WWII just signaled we’re already in one

Economists have spent months debating if a recession is on the horizon. One economic indicator predicts most of those arguments are already moot.

Mark Zandi, the top economist at Moody’s Analytics, said the U.S. economy could already be in a recession, according to the Vicious Cycle Index (VCI), an economic indicator Zandi and his colleagues created.

The measure is a tool used to identify when the economy has entered a recession by measuring how quickly unemployment is rising. It’s a labor-force adjusted version of the Sahm rule—which signals a recession if the three-month average of the unemployment rate increases by more than half a percentage point above its lowest point in the previous 12 months. The VCI uses the five-year moving average of the labor-force participation rate to adjust the unemployment rate, and flashes red when the three-month average rises more than one percentage point over the past year. According to Zandi, the VCI has increased by more than a percentage point in January and has remained elevated over the last three months.

“It has nailed every recession since WWII without falsely predicting a downturn,” Zandi wrote in a LinkedIn........

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