Can Machine Learning Improve Recession Prediction?

Big data utilization in economics and the financial world has increased with every passing day. In previous reports, we have discussed issues and opportunities related to big data applications in economics/finance.1 This report outlines a framework to utilize machine learning and statistical data mining tools in the economics/financial world with the goal of more accurately predicting recessions. Decision makers have a vital interest in predicting future recessions in order to enact appropriate policy. Therefore, to help decision makers, we raise the question: Does machine learning and statistical data mining improve recession prediction accuracy?