Hands-On: Tracking US Output With Alphacast
Hands On: Tracking US Output With Alphacast
By Maia Mindel (mmindel@alphacast.io)
Read more Alphacast Highlights here
Whether or not the US economy will enter a recession in 2023 is a crucial question for most analysts, given the financial tensions observed over the last month, resulting from the highest interest rates in decades. Unlike most countries, that define a recession based on two consecutive quarters of negative GDP growth, the United States utilizes a different definition - one provided by the NBER Business Cycle Dating Committee, which determines the business cycle peaks (and troughs) based on a series of 11 indicators. You can follow those, as well as the unemployment rate (utilized, though not directly, by NBER) in this dashboard. There is further analysis of what signs these indicators provide for output here.
Most of the data is available on Alphacast so far, in repositories such as the Bureau of Labor Statistics or the Bureau of Economic Analysis. However, unfortunately, a handful are not, and analyzing the complete breadth of data required is not always a possibility. Thus, this hands-on guide will show how to obtain the data from the FRED datasets, compile it, transform it, and present it - as it is in this pipeline.
Given that all data is available, either on our own platform or on publicly accessible ones, all information will be updated regularly and automatically as soon as published - both in the original sources and in all pipelines and charts using it.
The first step is to create a pipeline. To do this, click on the "create new" button, select pipeline, and choose a name and repository. Name the pipeline in any way that is easy to find later (especially since, if it is public, then the name is also publicly displayed), and select a relevant repository for it - in a public repository, everyone would be able to modify it, while a private one would allow for more control over modifications.
The second step is fetching a dataset. We sill begin with one that is not available (yet) on Alphacast: Industrial Production. This dataset is available on FRED, the Federal Reserve database of economic indicators. Select "Fetch FRED Data" (it could easily be Yahoo Finance Data as well, with similar precautions) and, within the Fetch menu, enter the data series "name" between brackets - as in, "INDPRO", not "Industrial Production: Total Index". You can restrict the timeframe for convenience, but it is not necessary here.
A convenient step when dealing with variables with abbreviated names is to rename them - in this case "INDPRO" to "Industrial Production". This will be especially useful for the second data series to use.
The "Output Variables" monitor has three more data series: GDP, Gross Domestic Income, and Gross Domestic Output. All three need to be added through a similar, not especially complex procedure.
To merge the datasets, select "add step above in new branch" if it is not available in the Alphacast platform, or "Select a dataset" if it is. In the case of GDP, it is available in a dataset in the BLS repository, which is relatively straightforward - select the dataset, select the relevant variables, and choose the merge format (merging Dates). GDP will (later) be renamed, for convenience.
To add the Gross Domestic Income data, however, one has to select the "add step above in new branch" route, since the dataset is only available in FRED - so the same steps are used, except that one can add a secondary step within the branch to rename the column before completing the merge. This is convenient, because the FRED ID for this data series is "A261RX1Q020SBEA".
The last step is calculating Gross Domestic Output, which is not publicly available but is simply defined as the average between GDP and GDI. This can be done quite easily through the "Calculate variable" option.
With all data in place, and all the formatting correct, the pipeline should be functioning properly - and ready to create as many charts as desired or needed. For instance, this one, appearing in the US Recession Tracker Dashboard:
This procedure allows for simple collection and presentation of key variables for monitoring the US (or any) economy and analyzing current and upcoming trends. The same blueprint can be used for monitoring the labor market or spending and income variables, both of which are in the same Dashboard. And for further analysis of the economic situation, one can look at a related highlight, which relies on the results from all three such pipelines to present a status report on the US economy.
