One by one the bears and the rational thinkers throw in the towel. Economist Robert Shiller is the latest to drink the Kool-Aid.

As noted by Business Insider Shiller tweeted the following about a post from White House Council of Economic Advisers Chair Jason Furman on various economic indicators:

Furman’s blog chart 4 of hours worked in manuf suggests, with new record high of 42, no recession for years to come.

Manufacturing hours worked is the fourth chart in the White House Blog report on the Employment Situation in March.

click on chart for sharper image

I recreate the chart below but start the timeline at 1940 rather than 1950. I also added some highlights in red.

Supposedly the current reading of 42 is all you need to know to understand a recession isn’t in the cards for “years to come”.

Note that in the mid-1940s a recession started with weekly hours over 45, something Shiller conveniently chopped off in his chart.

OK let’s toss that out as a war ending event.

Is there anything sacrosanct about 42 vs. 41 where many recessions started? I suggest no. And what about manufacturing employment vs. hours worked?

Good question. Here’s the chart.

Manufacturing Employment

Two Questions

  1. Is there anything about manufacturing employment that remotely suggests no recession for years to come? 
  2. Is there anything about manufacturing employment that indicates hours worked in manufacturing has the importance it may have had decades ago?


There is no single chart that is a sure fire indicator of anything. An inverted yield curve is probably the closest bet, but given QE and blatant Fed manipulation of interest rates, it’s highly likely the next recession starts with a positive curve.

Even if hours worked has high importance (and it doesn’t) there is absolutely nothing to suggest where manufacturing hours will be six months from now!

Shiller should know better than to make such statements.
I propose a $5,000 bet with Robert Shiller right now, donated to our favorite charity that he is wrong.

Mike “Mish” Shedlock