April: The Recession Indicator marked 28.1%
－ The Leading Index declined for two consecutive months
April: The Recession Indicator for Japan released by Japan Center for Economic Research (JCER) marked 28.1% (Figure below). The recession probability was retroactively revised upward in the past due to the reasons that the Leading Index as an underlying data fell for two consecutive months and the downward revision of the Leading Index from the preliminary release for previous month. The recession probability, however, still remains the level below 67% which alerts entering a recession.
What is the recession indicator? The recession indicator (probability) is an "early-warning indicator" to detect a coming recession. The probability takes a value from zero to 100% and indicates that higher value corresponds to higher recession risk. When the recession probability exceeds 67% for two consecutive months, we assess whether it is considered that "early warning signal" alarms to the business condition. The probability tends to rise sharply when the Leading Index as an underlying data falls successively for a few months and it is a large decline. The recession probability in the past is retrospectively revised every time the latest Leading Index is released. Figure below shows two types of recession probability; on the one hand, the probability which is derived from the data of up to six months ago (exhibited by black dashed line), and on the other hand, the probability which is obtained from all data including the latest one (exhibited by blue solid line).