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Forecasting US Recessions in Real-Time Using Regional Economic Sentiment

Year: 2025

Type: article

Abstract: Measures of regional economic sentiment, extracted from the Beige Book using natural language processing methods, consistently delivered reliable real-time forecasts of US recessions from the mid-1980s through the COVID-19 pandemic recession. Since then, recession risk probabilities have been choppy, with several false alarms. We attribute this unreliability to a post-2021 disconnect between measures of economic activity and the sentiment of business and community leaders.

Source: Economic Commentary (Federal Reserve Bank of Cleveland)

DOI: 10.26509/frbc-ec-202513

Authors: Christian L. Garciga, James Mitchell

Institution: Federal Reserve Bank of Cleveland

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: diamond

OpenAlex ID: W4416013869

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Cites: 14

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