Entering (and Trying to Exit) the Pandemic Recession

New paper at arXiv:2006.15183 

econ.EM econ.GN

Real-Time Real Economic Activity: Exiting the Great Recession and Entering the Pandemic Recession

Authors: Francis X. Diebold

Abstract: We study the real-time signals provided by the Aruoba-Diebold-Scotti Index of Business conditions (ADS) for tracking economic activity at high frequency. We start with exit from the Great Recession, comparing the evolution of real-time vintage beliefs to a "final" late-vintage chronology. We then consider entry into the Pandemic Recession, again tracking the evolution of real-time vintage beliefs. ADS swings widely as its underlying economic indicators swing widely, but the emerging ADS path as of this writing (late June) indicates a return to growth in May. The trajectory of the nascent recovery, however, is massively uncertain, particularly as COVID-19 spreads in the South and West, and could be reversed as quickly as it started.

Submitted 26 June, 2020; originally announced June 2020.

https://arxiv.org/abs/2006.15183