What's the Probability of a U.S. Recession in 2008?

A story in Tuesday's WSJ had economists upping the likelihood of a U.S. recession in 2008. Three-quarters of the 52 economists surveyed put the odds at or above 30%, but the range was gigantic from 5% to 90%. I put only teensy faith in what "up/down" economists -- I think that's Paul Krugman's phrase for market bingo-callers with no capital at risk -- have to say. That said, the likelihood of a U.S. recession is growing, and, credit crisis or no credit crisis, it's arguably somewhat overdue, with the current U.S. expansion now at the end of its sixth year. Either way, it's worth scanning a real market for the probability of a U.S. recession in 2008, and the one I use at Intrade says we are almost up to 60%.

Comments

[Jeff Miller:]

The title is not correct here. The 60% prediction is from the bettors at intrade, not the economists. Economic forecasts are in the 30% range.

2007 Sep 17 12:35 PM

[Sr. Pessimist:]

I feel something coming that isn't very well described by the word "recession." Recession is two or more consecutive quarters of negative economic growth, I believe. I sense a danger to the system at this point without sufficient economic growth, which may be more than just "don't recede." The US Dollar is in ill health, and by the system's own doing. This time we have a fully global economy. I think problems are possible now that were never possible before. Plus, I talk around a lot. My research doesn't just come from books, statistics, and articles. I get my information from people on the street so often. The US Dollar currency is in jeopardy in ways that you wouldn't write an article about.

2007 Sep 17 04:36 PM

[Randy Kirk:]

It's interesting, most of the economists look at the economy in terms of consumption (gdp equals aggregrate consumption
plus government spending plus net exports), which seems to me to lead more closely to the conclusion that the gdp has a high probability of declining because 'the consumer is tapped out' and it will be difficult to get credit due to the credit crisis. But if you use the production measure (gdp equals
productivity*aggregrat... hours worked), it seems to me one is lead to a more positive outlook, in that the US population grows at 1% annually, (gdp is not adjusted for population) hours worked is still on the upswing, and productivity, due to technology changes, is still at positive levels (although not at the high rates of a few years ago).

The productivity measure sheds more light on why the economies grow and I don't know why more economists lean more heavily on it (note gross domestic consumption should approx. equal gross domestic production).

Note that Paul Krugman discussed the gdp production measure as a background to explain why the Southeast Asian economies grew in his article "The Myth of Asia's Miracle." web.mit.edu/krugman/ww... (Krugman -- obviously aware of the production measure of gdp, is more bearish currently but in a recent interview said the credit mess "could" not "would" lead to a recession: www.truthdig.com/podca.../)

2007 Nov 20 03:50 PM

[Fides:]

It boils down to just buying American, and forgeting about our currency circulating in the world. We should stop this dependency on oil and turn over a greater market to Americans. As we have it 56% of Americans depend on the United States government for income, which means there is only a 44% open market available to us.
Walk away from OPEC, there is an international struggle to cut away from American dependency. Less and less countries are buying oil in dollars. It is time the United States works as it was designed to work with strong localized governments and great power to the states with a Federal control to protect the constitution and the Unity of the States. We can create a self-dependent market for ourselves, and pull away from these countries.

If we want an international market, we have Latin America struggling below, who is looking for work and ways to expand their market. Stop the racism, South America has a potential to be a great partner of North America. Lets just make it an American market, lets break free from EuroAsian interest.

2008 Jun 26 03:58 PM

[debtcollect...:]

Seems like they nail it for 2008, what is expected for 2009.\

www.debtcollectionor.c...

2008 Sep 06 12:07 PM