Recession Prediction on the Clock

Mertens, Thomas M.

Journal Article

Recession Prediction on the Clock

Abstract: The jobless unemployment rate is a reliable predictor of recessions, almost always showing a turning point shortly before recessions but not at other times. Its success in predicting recessions is on par with the better-known slope of the yield curve but at a shorter horizon. Hence, it performs better for predicting recessions in the near term. Currently, this data and related series analyzed using the same method are not signaling that a recession is imminent, although that may change in coming months.

Keywords: recessions; unemployment rate; yield curves; jobless; business cycles;