As noted in this post, the indicator detected a recession in March 2024, stayed above the threshold thereafter, so the implication is that we are currently the same recession. However, since then, the indicator has decreased substantially, so the recession probability is low.
From the website:
- The recession probability is computed from the dual-threshold extension of the Michez rule. The recession probability is the fraction of the 0.29pp–0.81pp band that the recession indicator has covered: (indicator 0.29) (0.81 0.29).
- Interpretation: The dual-threshold Michez rule works as follows: values of the indicator between 0.29pp and 0.81pp signal a probable recession; values above 0.81pp signal a certain recession. This dual-threshold extension accounts for uncertainty in the true recession threshold and provides a simple way to nowcast recession risk.
The indicator and probability estimates are now reported on an automated dashboard maintained by the authors.
