Short-Term Macro Forecasting

From Paul Krugman, who writes:

How bad is that ISM report?: The ISM non-manufacturing report... it’s bad... we should take this seriously: the same report called the upturn in employment in summer 2003, so the fact that it has fallen off a cliff should worry us.

But how bad is it?... Here’s the historical relationship between the index (horizontal axis) and the actual monthly change in employment, in thousands (vertical axis), data since July 1997. If this report is at all right, we’re in serious recession territory.