The Philadelphia Federal Reserve’s measure of manufacturing activity in the mid-Atlantic region plunged in January to a level that has typically signaled a U.S. recession.
The index’s reading in January of a negative 20.9 was the lowest since October 2001, near the end of the last recession. As the chart shows, readings of negative 20 (the horizontal red line) or below have either just preceded or coincided with a recession (shown by the gray bands) in all but one instance dating back to 1968. The one exception occurred in mid-1995, near the middle of the 1991 to 2001 economic expansion.
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