The goal of this project is to investigate recessions and the predictive power of several economic indicators that are correlated with the trends of the business cycle. The most popular indicator that is frequently referenced in news media is the “Yield Curve Inversion,” which has preceded the past seven - perhaps now, eight - recessions. Using publicly available historical data from between June 1976 to September 2019, we built a predictive model using R to determine the probability of recession implied by these indicators. Our model shows a high probability of recession at the end of September 2019, and it is highly likely, if not certain, that this prediction has become true, accelerated by the current global pandemic.

• This report represents the work of one or more WPI undergraduate students submitted to the faculty as evidence of completion of a degree requirement. WPI routinely publishes these reports on its website without editorial or peer review.

Creator

• Day, Timothy G.
• Fair, Alexander J.

Publisher

• Worcester Polytechnic Institute

Identifier

• E-project-043020-205947

Advisor

• Posterro, Barry John
• Abraham, Jon P.

Year

• 2020

Date created

• 2020-04-30

Resource type

• Major Qualifying Project

Major

• Actuarial Mathematics
• Mathematical Sciences

Rights statement

• In Copyright

License

• All rights reserved