Saturday , 13 July 2024

U.S. Recession Probabilities Index Says "Yes", My Indicators Say "No" – Is This Time Different?

The U.S. Recession Probabilities Index is currently at a level that has ALWAYS been followed by a recession. Interestingly, however, I don’t see recession signals in the internal indicators that I follow and which have been right for a long time now so this clearly puts that opinion in the “this time is different” category – or does it? Words: 255

So says Cullen Roche ( in edited excerpts from his original article* entitled USA Recession Odds: 100%?.

 Lorimer Wilson, editor of (Your Key to Making Money!), may have edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.

Roche goes on to say, in part:

Here’s an interesting new data point that the St Louis Fed has put together to calculate recession probabilities:

“Recession probabilities for the United States are obtained from a dynamic-factor markov-switching model applied to four monthly coincident variables: non-farm payroll employment, the index of industrial production, real personal income excluding transfer payments, and real manufacturing and trade sales. “

The US Recession Probabilities Index, as it is called, currently has a reading of 20%, a level that has ALWAYS been followed by a recession.  As you can see below, the index has NEVER approached 20% without a subsequent recession.  ALL 6 recessions since 1967 have coincided with 20%+ readings.

Interestingly, I still don’t see recession in my internal indicators…[which] have been right for a long time now (in the face of some very public recession predictions by reputable people)…

[Given the above, when my internal indicators point to “no recession,”…an indicator like the above clearly puts that opinion in the “this time is different” category….


Editor’s Note: The above post may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

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