Monday, December 04, 2006

Goldilocks' Wake-Up Call / hussman

i recommend reading the full piece! / empfehle den ganzen artikel zu lesen!

What is the probability of a recession beginning within the next 6 months?
Well, on the basis of a larger data set that includes interest rate differentials (yield curve, credit spreads), housing starts, and the ISM Purchasing Managers Index, the probability of a recession beginning within 6 months has spiked to about 79%, with the probability of a recession within 12 months now running about 92%. That's not certainty, however, and there have indeed been a few times when risk has shot up without an imminent economic downturn (the spike in 6-month risk to 83% in 1989 was not followed by a recession for a full year, and a couple of lesser spikes in the 1990's were uneventful). Suffice it to say that based on recent data, the odds of an oncoming recession have increased sharply and abruptly.

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