In the recent months, many economic experts feared a recession. Those in the industry were calling on the Fed to not raise interest rate. Since February 11, some economic indicators are beginning to look up, including the "Cornerstone Macro" model for odds of a recession went down from 64% to 47% and the public fear of a volatile stock market fell back down to "December levels."
The article argues, however, that we are not out of the woods yet. Even though Macro economic metrics are declining, financial markets still have the odds of an economic crash higher than the average. The article states that, "our attention tends to be gripped by the speed at which markets move." While this is true if the investors in the economy feel pressure to leave the market and create a self fulfilling prophecy, what really matters is where we end up, not the trends. This being said, we cannot predict the future and only time will tell the state of our economy.
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I'm curious to know what the Conference Board is predicting for this. Also, how is the increase in interest rate linked to a decrease in percentage based likelihood of a recession? It will be interesting to see the validity of these predictions 6-9 months down the line.
ReplyDeleteI wonder what these odds are based on. I am curious to see what the model for odds of a recession includes as its independent variables. It would also be interesting to know what an average likelihood for a recession occurring is.
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