Leading vs coincident signals
Recession indicators split into two fundamentally different jobs. Leading signals fire months before a downturn — they forecast. Coincident (nowcast) signals confirm a recession already in progress — they timestamp. Confusing the two is the most common methodological error in recession watching.
Why both are needed
A pure forecast panel is blind to unmodeled shocks: no yield curve predicted COVID-19. A pure nowcast panel gives no runway — by the time it fires, the recession has started. This monitor keeps them as separate blocks: forecast signals drive the composite score, nowcast signals confirm or veto whether a recession may already be underway.
Examples
Leading: yield curve (6–18 months early), building permits (often 12+ months), credit spreads, bank lending standards. Coincident: the Sahm rule and Chauvet–Piger probabilities — fast, real-time, but describing the present rather than the future. Initial claims sit on the border: high-frequency layoff counts that confirm onset within weeks but offer only a very short lead.