Federal Reserve Bank of San Francisco rules out US recession fears

Thomas M. Mertens, a Researcher from the Federal Reserve Bank of San Francisco’s Economic Research Department came out with a recession predictor based on macroeconomic time series, particularly the jobless unemployment rate.

The researcher claims that this predictor is almost as accurate as the slope of the yield curve but is more accurate at shorter horizons.

Key quotes

Currently, none of these predictors indicate an upcoming recession over the next two quarters. However, the underlying trend in these macroeconomic time series has started to turn and the predictions might change in the coming months.

The jobless rate does not currently signal an impending recession, nor do other macroeconomic time series analyzed using the same methodology.

In general, however, examining these series suggests that the business cycle is at a maturing stage when expansions typically come to an end.

Market implications

The economic update could help boost the latest corrective bounce in the US Dollar amid the holiday-thinned trading.

Also read: Forex Today: US Dollar on the backfoot as optimism persists