The Federal Reserve Bank of Cleveland published an Economic Commentary assessing a model that uses economic sentiment extracted from the Federal Reserve’s Beige Book to forecast recessions, estimating a 24% chance that the US economy was in recession in October 2025 and noting the estimate is less reliable than in prior decades. The research finds the approach produced accurate recession forecasts from the mid-1980s through 2021, but the relationship between Beige Book sentiment and recessions appears to have broken down since then. Beige Book tone has been notably more negative since mid-2022 despite continued economic growth, leading to three instances where the model’s recession probability exceeded 50% without a recession occurring. The authors, Christian Garciga and James Mitchell, point to elevated and volatile measures of economic uncertainty since 2021 as a potential driver of the disconnect, correlating with Beige Book sentiment volatility and reflecting public debate over issues such as interest rates and trade policy.
Federal Reserve Bank of Cleveland 2025-10-11
Federal Reserve Bank of Cleveland research estimates a 24% October 2025 recession probability from Beige Book sentiment but finds the signal has weakened since 2021
The Federal Reserve Bank of Cleveland's Economic Commentary evaluates a model using Beige Book sentiment to forecast recessions, estimating a 24% chance of a U.S. recession in October 2025. The model was accurate from the mid-1980s to 2021, but its reliability has declined due to increased economic uncertainty and negative sentiment since mid-2022. Authors Christian Garciga and James Mitchell attribute this to volatility in economic uncertainty and public debate on interest rates and trade policy.