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Forecasting growth over the next year with a business cycle index

Author

Listed:
  • David Lang
  • Kevin J. Lansing

Abstract

The current economic recovery is proceeding at a tepid pace despite massive federal fiscal stimulus and extremely low interest rates. Forecasts derived from business cycle indicators produced by the Chicago and Philadelphia Federal Reserve Banks predict that real U.S. GDP growth through the first half of 2011 will remain at or below potential. If these forecasts prove accurate, then the historical relationship between real GDP growth and the labor market suggests that the unemployment rate could rise by as much as 0.5 percentage point during this period.

Suggested Citation

  • David Lang & Kevin J. Lansing, 2010. "Forecasting growth over the next year with a business cycle index," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue sep27.
    • Handle: RePEc:fip:fedfel:y:2010:i:sep27:n:2010-29
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    References listed on IDEAS

    as
    1. Congressional Budget Office, 2010. "The Budget and Economic Outlook: An Update," Reports 21670, Congressional Budget Office.
    2. Congressional Budget Office, 2010. "The Budget and Economic Outlook: An Update," Reports 21670, Congressional Budget Office.
    3. Carmen M. Reinhart & Vincent Reinhart, 2010. "After the fall," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 17-60.
    4. repec:cbo:report:216708 is not listed on IDEAS
    5. Congressional Budget Office, 2010. "The Budget and Economic Outlook: An Update," Reports 21670, Congressional Budget Office.
    6. Charles L. Evans & Chin Te Liu & Genevieve Pham-Kanter, 2002. "The 2001 recession and the Chicago Fed National Index: identifying business cycle turning points," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 26(Q III), pages 26-43.
    7. Scott Brave, 2009. "The Chicago Fed National Activity Index and business cycles," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Nov.
    8. Congressional Budget Office, 2010. "The Budget and Economic Outlook: An Update," Reports 21670, Congressional Budget Office.
    9. Congressional Budget Office, 2010. "The Budget and Economic Outlook: An Update," Reports 21670, Congressional Budget Office.
    10. Mary C. Daly & Bart Hobijn, 2010. "Okun’s law and the unemployment surprise of 2009," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue mar8.
    11. Congressional Budget Office, 2010. "The Budget and Economic Outlook: An Update," Reports 21670, Congressional Budget Office.
    12. Travis J. Berge & Òscar Jordà, 2010. "Future recession risks," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue aug9.
    13. Congressional Budget Office, 2010. "The Budget and Economic Outlook: An Update," Reports 21670, Congressional Budget Office.
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    15. repec:cbo:report:216706 is not listed on IDEAS
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    Cited by:

    1. Nicholas Taylor, 2014. "Economic forecast quality: information timeliness and data vintage effects," Empirical Economics, Springer, vol. 46(1), pages 145-174, February.
    2. Lai, Van Son & Ye, Xiaoxia & Zhao, Lu, 2019. "Are market views on banking industry useful for forecasting economic growth?," Pacific-Basin Finance Journal, Elsevier, vol. 57(C).

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