Ecoinometrics - The Federal Reserve is implicitly forecasting a recession

And why you shouldn’t look at the unemployment rate to predict a recession

The thing with recessions and standard economic data is that everything looks fine until it doesn’t.

Commentators have made a lot of noise about the job market posting strong numbers. Surely if the job market is that tight that can only mean the economy is doing great. And if the economy is doing we can’t possibly be heading for a recession. 

The reality is, you don’t want to look at a lagging indicator if you want to forecast a recession…

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The Federal Reserve is implicitly forecasting a recession

Here is a quote from Ben Bernanke, then Chairman of the US Federal Reserve, during a testimony in front of the senate in November 2007:

“Our forecast is for moderate, but positive growth going forward through the next few quarters.

Economists are extremely bad at predicting turning points, and we don’t pretend to be any better."

No kidding…