How to Visualize Changing Recession Start Date Forecasts
In case you missed it, we are in a recession.
According to Intensity’s latest US recession start date forecast, there is a 50% probability of a recession starting sometime in the January to February 2019 period. And a 97% probability of it starting sometime within the next 6 months.
Their “point estimate” of a recession start is January 2019.
Like, as in, right now!
If true, it will take awhile for the impacts to start showing up in the official government statistics. But the stock market sell-off last quarter may be a harbinger of things to come.
Intensity, an economics and data science firm based in San Diego, CA, developed and back-tested a machine learning prediction algorithm for its clients. The firm started releasing a monthly forecast of the next US recession start date to the public starting in March 2018.
Over the course of the last 11 months, it has been interesting following the updates to their forecast as economic conditions changed.
Intuitively, one would expect that the forecast would “settle down”, the closer the expected start date became.
And it got me thinking about what the best way is to visualize these changing forecasts.
Visualizing Forecast Updates Over Time
The forecasted recession start date is not linear with time. For example, in March 2018, the next recession was forecasted by Intensity to start in April 2019. But in April 2018, the forecast was revised, and the recession was to start 6 months earlier in October 2018.
Plotting the month of the forecast on the x-axis and the forecasted month of the recession start on the y-axis yields a “traditional time series” view as shown below.
As time progresses from left to right, we can see the forecasted recession start date fluctuating up and down, settling on January 2019, the most recent forecasted start date.
However, another way to visualize this is to show the progression of time vertically, from bottom to top. In this case the forecasted recession start date would fluctuate horizontally, left and right, as shown below.
I don’t know about you, but I find this second view more appealing. Maybe it is the old economist in me, trained on the Phillips Curve in graduate school. But for me, the vertical, “up-down” orientation makes the variation in the forecasted recession start date “pop” more than in the horizontal, “left-to-right” view.
So, Recession in 2019?
It will be very interesting to see if Intensity sticks to its January 2019 point estimate. Prior to the unexpectedly positive December 2018 jobs report, the consensus seemed to be a recession starting some time in 2019 or 2020. For example, Gary Shilling recently tossed his hat into the recession ring with a predicted 66% chance of a recession in 2019.
However, the positive jobs report apparently has many economists now softening their stance on a recession this year. And there is talk of policy makers being able to sidestep a recession.
Only time will tell…so stay tuned!
Plotting Ordered Times Series in Tableau
By the way, these charts were made in Tableau. And it was not as straight forward as flipping the axes to get the vertical view. Tableau’s default inclination is to “connect the dots” from left to right when time is involved.
Fortunately, there is an easy way to get Tableau to connect the dots vertically. This makes use of the Path property in the Marks card. I simply added a field to my raw data that indicated the order of my data, which, of course was calendar order.
Then dropping this field on the Path property in the Marks card tells Tableau to connect the dots (or “Marks” in Tableau-speak) in this order. With the date of the forecast on the vertical, y-axis, Tableau connects the dots from bottom to top.
Very slick!