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Models Only Get You So Far Remarks for the Federal Reserve Banks of Atlanta and New York’s First Annual Joint Research Day on Quantitative Tools for Monitoring Macroeconomic and Financial Conditions Simon Potter February 22, 2019 The views presented here are those of the author and do not necessarily reflect those of the Federal Reserve Bank of New York or the Federal Reserve System Figure 1: Near-Term Recession Probabilities U.S. Recession* in 6 Months Currently in U.S. Recession* 25th Pctl 0% 25th Pctl 10% Median 2% Median 12% 75th Pctl 5% 75th Pctl 17% Note: Based on all responses from the January 2019 Surveys of Primary Dealers and Market Participants. *NBER defined recession. Source: Federal Reserve Bank of New York. Figure 2: Probability Distribution of Year in Which the U.S. First Enters a Recession* Average Percent >50 60 50 40 30 20 10 0 -10 2019 or Earlier 2020 2021 2022 Note: Based on all responses from the January 2019 Surveys of Primary Dealers and Market Participants. *NBER defined recession. Source: Federal Reserve Bank of New York. 2023 or Later Figure 3: Median Probability of U.S. Being in a Recession Currently and in 6 Months Percent U.S. currently in a recession* U.S. being in a recession in 6 months** 100 90 80 70 60 50 40 30 20 10 0 Jun-07 Jul-07 Sep-07 Oct-07 Dec-07 Jan-08 Mar-08 Apr-08 Survey date Jun-08 Jul-08 Note: Based on responses from the Survey of Primary Dealers. *Represents 1 minus the respondents’ reported probability of being in an NBER-defined expansion. **NBER defined recession. Source: Federal Reserve Bank of New York. Sep-08 Oct-08 Dec-08