Nowcasting Recessions using the SVM Machine Learning Algorithm

Recessions reflect great dislocation in the economy and are often the source of societal anxiety. During a recession, unemployment is usually higher, and output is lower. Accurately identifying turning points from expansions to recessions has broad use for policymakers, business executives, academics, and individuals. Additionally, investors with enough resources to use this information in their investment process may change their portfolios as the economy turns from growth to contraction. There have been several attempts in the literature to accurately predict the timing of recessions.