How to Forecast a Recession | by Jeffrey Frankel - Project Syndicate

How to Forecast a Recession | by Jeffrey Frankel - Project Syndicate

Some of the most popular indicators for forecasting recession suggest that the US may be headed toward a prolonged downturn, if not in the next year, then in the next four. But, given these indicators' limitations, it is impossible to know definitively what lies ahead.

How to forecast a recession

Imagine you are sailing a ship through dense fog, looking out for land. Your lookout spots species of birds typically found offshore. It now seems likely that you are approaching land, but it is impossible to know for sure until you see the coastline. If a US recession is land, the “birds” are already swooping into view. But these sightings offer no guarantees of what lies ahead, only probabilities.