The Fed is out with its forecast from its September meeting, and it effectively projects constant inflation and unemployment over the next several years. One thing that I did think was interesting is that if the Fed forecast is correct, then the dynamic equilibrium recession detection algorithm would predict a recession in 2019 (which is where it currently forecasts one unless the unemployment rate continues to fall):
This happens to be where the two forecasts diverge (the dynamic equilibrium model is a conditional forecast in the counterfactual world where there is no recession in the next several years [1]).
Here is an update versus the FRBSF forecast as well (post-forecast data in black):
...
Footnotes:
[1] While it can't predict the timing of a recession, it does predict the form: the data will rise several percent above the path (depending on the size of the recession) continuing the characteristic "stair-step" appearance of the log-linear transform of the data:
Yep. Just eyeballing the data I reckon you get a similar vibe
ReplyDeletehttps://twitter.com/DrCameronMurray/status/872056615066783744
and
https://twitter.com/DrCameronMurray/status/891644191729623040
and
https://twitter.com/DrCameronMurray/status/859305271855693824
The end of 2018 will be a turning point for US economy.
Yeah, there seem to be a confluence of factors:
DeleteJOLTS survey
https://informationtransfereconomics.blogspot.com/2017/09/jolts-leading-indicators-update.html
As well as some other indicators (including yield curve inversion)
https://informationtransfereconomics.blogspot.com/2017/06/todays-fed-decision-and-recession.html