{"id":256020,"date":"2024-08-21T16:41:17","date_gmt":"2024-08-21T16:41:17","guid":{"rendered":"https:\/\/michigandigitalnews.com\/index.php\/2024\/08\/21\/recession-before-the-election-econbrowser\/"},"modified":"2025-06-25T17:11:57","modified_gmt":"2025-06-25T17:11:57","slug":"recession-before-the-election-econbrowser","status":"publish","type":"post","link":"https:\/\/michigandigitalnews.com\/index.php\/2024\/08\/21\/recession-before-the-election-econbrowser\/","title":{"rendered":"Recession before the Election? | Econbrowser"},"content":{"rendered":"

[ad_1]
\n<\/p>\n

\n\t\t\t\t<\/p>\n
\n

I see a bevy of economists (a lot on the right, see here<\/a>) saying we\u2019re in a recession, or soon to be in one. What do predictive models say?<\/p>\n

Miller (2019)<\/a> showed the maximum AUROC probit model for predicting recessions at the 3 month over the 1954-2018 period uses the 10yr-Fed funds spread. Updating his regressions, assuming no recession as of August:<\/p>\n

\"\"<\/a><\/p>\n

Figure 1:<\/strong> 10 year \u2013 Fed funds spread, % (blue, left scale), estimated probability of recession (red, right scale). Interest rate data for August through 8\/20. Source: Treasury, Fed via FRED, and author\u2019s calculations.<\/em><\/p>\n

The McFadden R2 from this regression is 0.15, and puts the November recession probability at 35%. (Adding in the Chicago Financial Conditions Index raises the McFadden R2 to 0.31, but yields a recession probability of 0.07 for November).<\/p>\n

Note that this is not conjunctural analysis (are we in<\/em> a recession now?), but forward looking.<\/p>\n

\u00a0<\/p>\n<\/p><\/div>\n

<\/p>\n