Working Paper: NBER ID: w27482
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 highly uncertain (particularly as COVID-19 spreads in the South and West) and could be revised or eliminated as new data arrive.
Keywords: Nowcasting; Economic Conditions; Business Cycles; Aruoba-Diebold-Scotti Index
JEL Codes: E32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| ADS index (C43) | real economic activity (E39) |
| jobless claims (J65) | ADS index (C43) |
| payroll employment (J68) | ADS index (C43) |
| Pandemic economic impact (F69) | ADS index (C43) |
| Great Recession (G01) | ADS index (C43) |