Predicting Future Recessions

This note introduces a general method to derive recession probabilities from forecasts using real-time data in parsimoniously specified logistic regressions. I apply two specifications of the general method that produces an implied recession probability to forecasts contained in releases of the Survey of Professional Forecasters (SPF). Using yearly forecasts from the 2018:Q3 SPF, the probability of a recession peaks between 30 percent in 2020 and 40 percent in 2021. Using quarterly forecasts, the probability of a recession within four quarters is monotonically increasing during the forecast, hitting a high between 35 and 40 percent in 2019:Q3