In this episode of Planet Money, co-hosts Kenny Malone and Keith Romer explore recession indicators, contrasting viral social media trends with the data economists use. They discuss alternative indicators like the Men's Underwear Index and the Lipstick Index, then delve into the SOM rule, named after economist Claudia Somme, which uses unemployment rate changes to identify recessions. Economist Menzi Chin explains the yield curve and its historical accuracy in predicting recessions, noting its current partial inversion and a 22% probability of recession in the next year. Finally, they examine the Leading Economic Index (LEI), overseen by Justyna Żabińska-Lomonicka, which combines ten different data sets and uses the "3D rule" (duration, depth, and diffusion) to assess recession risk, concluding that current indicators do not signal an imminent recession, though a sudden shock like a global trade war could change the outlook.
