Recession Forecast
This chart displays the model's predicted probability of a recession occurring 12 months into the future, based on key macroeconomic indicators such as inflation, yield spreads, unemployment, permits, and sentiment data.
Understanding the Recession Risk Model
What is this Model?
This is a proprietary machine learning model that forecasts the probability of a U.S. recession occurring within the next 12 months. It is trained on decades of economic data, including yield curve dynamics, inflation, unemployment, and financial conditions.
How to Interpret It
The line represents the model's output probability. A rising probability suggests increasing economic risk and a higher likelihood of a recession in the coming year. The gray shaded areas represent historical recessions as defined by the National Bureau of Economic Research (NBER). You can compare the model's past forecasts to actual recessions to gauge its historical accuracy and responsiveness.
Practical Applications
- Adjust long-term portfolio risk based on the macroeconomic outlook.
- Time strategic entries into defensive sectors (like healthcare or consumer staples) when risk is high, or cyclical sectors when risk is low.
- Gain high-level, data-driven context on the health of the U.S. economy to inform investment decisions.