Data Source:
- FRED (Federal Reserve Economic Data): Series
SAHMREALTIME(Sahm Rule),DGS10/DGS2(Treasury Yields),ICSA(Jobless Claims),INDPRO(Industrial Production),HOUST(Housing Starts). - Univ. of Michigan: Consumer Sentiment data via FRED (
UMCSENT).
Tools Used:
- Frontend: React, TailwindCSS, and Recharts for the visualization.
- Backend: DataSetIQ API (my own project) to normalize the different reporting frequencies (daily vs. monthly) into a single live score.
Methodology: I created a composite index (0-100) where 0 is a booming economy and 100 is a guaranteed recession. The model weights historical leading indicators:
- 50% Weight: Yield Curve + Sahm Rule (Highest predictive power).
- 30% Weight: Jobless Claims + Housing Starts.
- 20% Weight: Industrial Production + Consumer Sentiment.
Key Insight: The current score is 21% (Low Risk). There is a massive divergence right now: Consumer Sentiment is flashing "Recession" (-25% YoY), but hard data like Industrial Production (+1.5%) and the Yield Curve (Positive +0.60%) suggest a soft landing is holding.
Live Interactive Dashboard: You can check the live data and the historical backtest here: Recession Risk Index
Also, please do let me know if there are areas to improvise here.
by dsptl
1 Comment
The thing you’re not taking into account here is the Median Real Wages vs. Productivity, you have productivity accounted for but production can be done without stimulating the economy if you don’t pay people to do it. Productivitiy has skyrocketed since Covid due to automation and computing while median real wages have stagnated and even dropped in the same time period. The other economic indicator you should be looking at is the Gini Coefficient. The U.S. the second highest first world country after turkey and the percents for the gini coefficient have been steadily increasing since the 60’s with a rapid increase in the past 20 years across the world.
TLDR: your model fails to display the reverse pyramid economy because you aren’t accounting for cost of living vs real wages for the majority of the western world.