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 ).
Here is an update versus the FRBSF forecast as well (post-forecast data in black):
 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 vibeReplyDelete
The end of 2018 will be a turning point for US economy.
Yeah, there seem to be a confluence of factors:Delete
As well as some other indicators (including yield curve inversion)