Forecasting Recessions in the U.S.A.

Abstract

Many economists have raised concerns about the next recession in the U.S., especially after the Great Recession in 2008. Many believe that the next recession will strike either this year (2019) or the next year (2020). This paper first analyzes different macroeconomic indicators such as Buffet Indicators, interest rate, unemployment rate, etc. In terms of modelling the data, a Probit model is applied to determine what variables can affect the probability of a recession. Then, going beyond whether or not a recession is likely at any time in future, a relevant question will be how long a time might elapse before the next recession will set in. This can be answered by using a Poisson model. Our results from the Probit model suggest that the government should focus on improving unemployment rate rather than interest rates by having more open policies for small businesses. In addition, the Poisson model forecasts that the next recession will likely occur in 2020.

Date of Award	2019
Original language	American English
Awarding Institution	Eastern Illinois University
Supervisor	Mukti P Upadhyay (Supervisor)