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Wednesday, November 7, 2012

Welcome to the recession Mr. President

Many economists continue to say we are not in or near a recession.  I have presented many charts that suggest we are already in or very near a recession.  However, most of those charts show past history where the indicators have gotten to levels we are at now, but we did not go into a recession.  That leaves wiggle room.  I think most people cannot believe we can have a recession with the FED printing money and interest rates at zero.  I have always taken the opposite side.  With all this stimulus and the economy barely growing a recession is inevitable on not far off.  Here is a chart based on the FED's own data that might end the argument.

Since this data series started, recession odds rising to the current level of 20% has always meant recession.  We have seven successful predictions and zero false readings.  With so many other pieces of data looking very recession like already it is pretty hard to say this indicator will be wrong this time.  It also looks like we are already in recession or one is imminent based on the past history.  In Earnings rebound in question   I talked about the high number of companies warning for the 4th quarter versus those with positive guidance.  I believe that confirms this indicator that we are already in a recession.  The market may start to reflect that in the months ahead. 



Anonymous said...

Great post. Thank you for sharing this. How did you get the shaded recession areas to show up on the graph? When I go to the chart on Stl Fed, it doesn't show up on there.


Traderbob58 said...

To turn the recession bars on you have to edit the graph. Just below the chart is a graph link that opens up a few options. One of those is the recession bars.


Anonymous said...

thank you


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