How Uncertain Is the Estimated Probability of a Future Recession?

Richard Crump and Nikolay Gospodinov

No 20250529, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Since World War II, the U.S. economy has experienced twelve recessions—one every sixty-four months, on average. Though infrequent, these contractions can cause considerable pain and disruption, with the unemployment rate rising by at least 2.5 percentage points in each of the past four recessions. Given the consequences of an economic downturn, businesses and households are perennially interested in the near-term probability of a recession. In this post, we describe our research on a related issue: how much uncertainty is there around recession probability estimates from economic models?

Keywords: recession predictability; term spread; uncertainty; quantification (search for similar items in EconPapers)
JEL-codes: C52 C53 E32 E37 (search for similar items in EconPapers)
Date: 2025-05-29
New Economics Papers: this item is included in nep-his and nep-mac
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