“The risk that the U.S. economy will enter into a national recession at some time in the next twelve months now stands at 2.4%, which…works out to be about a 1-in-42 chance…according to a model developed by Jonathan Wright of the Federal Reserve Board in 2006…”
By Lorimer Wilson, editor of munKNEE.com – Your KEY To Making Money!
[These edited excerpts* (223 words) from the original article (1194 words) by Political Calculations provide you with a 81% FASTER – and EASIER – read. Please note: This complete paragraph, and a link back to the original article, must be included in any article re-posting to avoid copyright infringement.]
We continue to anticipate that the probability of recession will continue to rise into 2019, partially as a consequence to…[the recent] rate hike and also because the Fed communicated that it is likely to continue hiking the Federal Funds Rate up to three times in 2019.
…It should be noted, [however,] that Wright’s model is based on historic data where recessions have generally started at much higher interest rates than they are today, and which also doesn’t consider the additional quantitative tightening that the Fed might achieve through reducing the holdings of U.S. Treasuries on its balance sheet…[and, as such,] It is quite possible that the model is understating the probability of recession…
(P.S…If you want to predict where the recession probability track is likely to head next, please take advantage of our recession odds reckoning tool, which like our Recession Probability Track chart, is also based on Jonathan Wright’s 2006 paper describing a recession forecasting method using the level of the effective Federal Funds Rate and the spread between the yields of the 10-Year and 3-Month Constant Maturity U.S. Treasuries.)”
(*The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.)
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