International Journal of Scientific Research and Engineering Development

The work of understanding the changes that lead to a recession is enriched here with the inclusion of labour market indicators, financial signals, and global stock market interdependencies. A qualitative magnitude scale is designed to categorize the four different types of recession Minor, Major, Severe, and Ultra based on the combined strength of the changes in unemployment rates, job openings, yield curve inversions, and the Sahm Rule. The suggested model facilitates recession tracking via the Anticipation–Precision Frontier, thereby enabling decisionmakers to weigh the benefits of early detection against the costs of false-alarm risks. Moreover, the paper studies the effects of cross-country contagion among nine major global stock indices by resorting to the Stock Return Recession Indicator (SRRI) and the Global Recession Indicator (GRI).
Besides the issue of short-term forecasting, the research reveals the dynamics of a U.S. recession as a consequence of larger global upheavals such as post-pandemic economic slowdown, inflationary pressures, supply chain bottlenecks, and energy shocks. Hence, the paper becomes a multidimensional, empirically based framework for the assessment and classification of recessions.