Abstract
This paper develops a new method for detecting US recessions in real time. The method constructs millions of recession classifiers by combining unemployment and vacancy data to reduce detection noise. Classifiers are then selected to avoid both false negatives (missed recessions) and false positives (nonexistent recessions). The selected classifiers are therefore perfect, in that they identify all 15 historical recessions in the training period without any false positives. By further selecting classifiers that lie on the high-precision segment of the anticipation-precision frontier, the method optimizes early detection without sacrificing precision. On average, over 1929–2021, the classifier ensemble signals recessions 2.2 months after their true onset, with a standard deviation of 1.9 months. Applied to May 2025 data, the classifier ensemble gives a 71% probability that the US economy is currently in recession. Backtesting to 2004, 1984, and 1964 confirms the algorithm’s reliability. Algorithms trained on limited historical windows continue to detect all subsequent recessions without errors. Furthermore, they all detect the Great Recession by mid-2008—even when they are only trained on data up to 1984 or 1964. The classifier ensembles trained on 1929–2004, 1929–1984, and 1929–1964 data give a current recession probability of 58%, 83%, and 25%, respectively.
Figure 8A: Anticipation-precision frontier of two million perfect recession classifiers for the United States, April 1929–December 2021
Figure 11B: Recession probability in the United States, January 2022–May 2025, obtained from the classifier ensemble trained on April 1929–December 2021 data
Figure 13B: Recession probability in the United States, January 1985–May 2025, obtained from the classifier ensemble trained on April 1929–December 1984 data
Citation
Michaillat, Pascal. 2025. “Early and Accurate Recession Detection Using Classifiers on the Anticipation-Precision Frontier.” arXiv:2506.09664v1. https://doi.org/10.48550/arXiv.2506.09664.
@techreport{M25,
author = {Pascal Michaillat},
year = {2025},
title = {Early and Accurate Recession Detection Using Classifiers on the Anticipation-Precision Frontier},
number = {arXiv:2506.09664v1},
url = {https://doi.org/10.48550/arXiv.2506.09664}}