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Forecasting US Recessions in Real-Time Using Regional Economic Sentiment

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  • Christian Garciga
  • James Mitchell

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.

Suggested Citation

  • Christian Garciga & James Mitchell, 2025. "Forecasting US Recessions in Real-Time Using Regional Economic Sentiment," Economic Commentary, Federal Reserve Bank of Cleveland, vol. 2025(13), pages 1-12, November.
    • Handle: RePEc:fip:fedcec:102077
    DOI: 10.26509/frbc-ec-202513
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    References listed on IDEAS

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