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by Animats
2470 days ago
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"The indicator has both correctly signaled a recession 4–5 months following the beginning of the recession and has virtually never called a recession incorrectly since 1970.' This is more like "how will we know when a recession has already started without waiting for a down GDP for two quarters." That's 6 months in. This signal lets you know 4-5 months in. Not exactly a leading indicator. |
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It's at least 6 months in: NBER recession dating even for recessions that include at least two down quarters (which, while a popular conception is not the official definition, though I don't think any two-quarter consecutive downturn has failed to be included within a declared recession) is often before the first down quarter in a consecutive pair. (E.g., the Great Recession is timed from the Q4 2007 peak, even though there was only one quarter of decline immediately following, then a dead-cat bounce quarter, then a four quarter consecutive decline. If you looked for a pair of down quarters, you'd detect the Great Recession a year after it started; 4-5 months moves that up a lot.)