Philly Fed Turns Negative

Today's Philly Fed report for December was weaker than expected at -5.7 vs. forecasts of +6.0.  It was also the first negative reading since June 2005 and was the lowest reading since April 2003.  Like this morning's initial jobless claims report, the weak Philly Fed number is likely to ratchet up the recession talk.  Below we highlight the Philly Fed since 1968 with recessions highlighted in green.  While negative readings coincide with recessions, there were also four separate periods during the nineties when the indicator turned negative and no recession occurred.