Tuesday, October 09, 2007

No Economic Recession in Sight

U.S. recession 2007 odds:

U.S. recession 2008 odds:
From today's WSJ article "No Recession In Sight," by the chief economist of the Bank of America:

"Despite recent financial turmoil and a dismal housing market, there are key reasons why the economy will continue to expand, albeit at a modest pace, and not go into recession. Businesses are well poised to absorb a period of weaker product demand and are unlikely to significantly alter their hiring and investment behavior. Consumer spending is supported by rising incomes. Exports are strong. And monetary policy is consistent with sustained growth in domestic demand. Next year, we will look back and once again marvel at the flexibility and resilience of the economy."

The "no recession in sight" view is confirmed by futures trading on Intrade.com for contracts on a "U.S. Recession in 2007" and a "U.S. Recession in 2008," shown in the graphs above. For 2007, the chances for a recession have fallen from almost 15% a month ago to almost 5% currently. For 2008, odds of a recession were above 50% for most of September, and have now fallen below 50% in the last week.

Upcoming: On Decemer 1, 2007, the U.S. economic expansion will celebrate its 6th birthday.

4 Comments:

At 10/09/2007 12:43 PM, Anonymous bob wright said...

Mark,

Have you ever checked the predictive accuracy of these futures contracts?

Or perhaps the better question is: what significance do you put on the predictive accuracy of these contracts?

Or, is there a better question I'm not thinking of?

 
At 10/09/2007 1:53 PM, Anonymous Anonymous said...

...I think it's a blatant (but useful to the financial community) lie, self serving blind manipulation meant to be reassuring and encouraging all the little working folks to keep on spending, borrowing, and buying.
No economic recession in sight? Please.

 
At 10/09/2007 3:19 PM, Anonymous bob wright said...

anonymous 1:52 pm

On what basis do you make this assertion?

 
At 11/17/2007 7:23 AM, Blogger Michael said...

I don't know what anonymous is thinking but I'll tell you what I mean. First property value is shrinking. Second taxes, fuel, food, and cost of goods are rising(oh yah health care also). Third in an attempt to remain profitable, company's are dropping benefits, jobs, and any thing else they can find to lighten the load. Fourth with the "housing crises" and the decrease in new construction more people will not be able to pay their bills, more houses go into foreclosure, more credit crunch, more jobs lost, can't pay bills.....

If someone dose not start a big spending spree in the us economy,it will keep slipping downwards.

 

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