NY Fed, Report: Look Out for Outlook-at-Risk

“Outlook-at-Risk provides a timely, quantitative approach to measuring risks to the future evolution of the economy. Recent banking stresses remind us that financial conditions can evolve rapidly and directly affect the likely set of outcomes for output, inflation, and the unemployment rate. The experience during the 1987 tightening cycle, which occurred against the backdrop of the 1987 stock market crash and the savings and loan crisis, suggests that financial conditions can remain tight for prolonged periods of time even absent additional shocks.”