US economic surprise index sharply higher going into election

A quick post here. Sober Look has posted on Citigroup’s economic surprise index, noting that it has started to roll over again, ever so slightly. But the trend is clear for the past two to three months and it has been sharply higher, meaning economic data surprises are much more positive than they were two months ago.

In terms of economic sentiment, I think this is a significant boost for President Obama going into the election. And consumer sentiment surveys have consistently demonstrated this. The President has also seen his poll numbers increasing.

Given the increase in the surprise index, the data are not suggesting recession is on the horizon because you would expect to see negative surprises leading to economic data revisions to the downside if that were the case. So recession is not baked into the cake in the US. Recession, when it does come will be an entirely manufactured event due to the political and ideological opposition to the present large government deficits in the US.