Are we in a recession? "We" in this case only refers to the United States (for now, because data is easy to get). While there are many definitions for what constitutes a recession, the Chicago Federal Reserve Bank National Activity Index (CFNAI) is a good monthly indicator, which represents current economic activity, where past recessions periods have coincided with its three-month moving average falling below -0.7.
Using this moving average, we see: We are not in a recession.
Using a basic logistic regression on the monthly CFNAI indicator's underlying components (85 factors rolling up into production/income, consumption/housing, employment, and sales), we can estimate a probability of currently being in a recession.
We are not in a recession, with a probability of 76 percent.
While we can't predict the future, we know what the events leading up to past recessions looked like. By adding a forward lag to past recession periods, we can try to estimate the probability of a recession happening at any point in the next 12 months.
Imminent recession is unlikely, with a probability of 65 percent.
Data source: Federal Reserve Bank of Chicago, Chicago Fed National Activity Index [CFNAI], retrieved from FRED, Federal Reserve Bank of St. Louis.
Last updated: 2023-12-08 10:01:33