What I find most interesting about this is knowledgeable people say the odds of a recession really has little to nothing to do with what is happening here in the U.S. It's mostly the rest of the world going into a hole and dragging the U.S. with it now. So, we might see the first world wide recession or even depression next in the next 5 or 10 years. However, I think the U.S. being the most self evolving and resilient economy on earth likely will stay on top of the heap of worldwide economies. So, you are going to see worldwide investors seeing the U.S. as the closest thing to a safe haven that there presently is on earth.
begin quote from:
https://www.yahoo.com/finance/news/jpmorgan-recession-risk-new-high-160251309.html
JPMorgan: The odds of a recession starting in 12 months has hit a high
Sam Ro,Yahoo Finance 5 hours ago
The probability of a recession occuring within the
next 12 months has never been higher during the current economic
recovery. This is according to the economists at JPMorgan.
"Our preferred macroeconomic indicator of the probability that a recession begins within 12 months has moved up from 30% on May 5 to 34% last week to 36% today," JPMorgan's Jesse Edgerton wrote. "This marks the second consecutive week that the tracker has reached a new high for the expansion."
JPMorgan's proprietary model considers the levels of several economic indicators, including consumer sentiment, manufacturing sentiment, building permits, auto sales, and unemployment.
This comes on the heels of Friday's disappointing May jobs report.
According to the Bureau of Labor Statistics, US companies added just
38,000 nonfarm payrolls during the month. Economists were expecting
160,000. Meanwhile, the unemployment rate fell to 4.7% in May from 5.0%
in April, but this was largely a function of 458,000 workers dropping
out of the labor force.
JPMorgan notes that nonfarm payrolls is actually not part of the model. But the unemployment rate is. Interestingly, a low unemployment rate can be considered an ominous sign.
“The unemployment rate enters the model in two ways," Edgerton explained. "As a near-term indicator, we watch for increases in the unemployment rate that occur near the beginning of recessions. So this morning's move down in the unemployment rate lowered the recession probability in our near-term model. But we also find the level of the unemployment rate to be one of the most useful indicators of medium-term recession risk. So the move down in unemployment raises the model's view of the risk of economic overheating in the medium run and raises the 'background risk' of recession."
"Our preferred macroeconomic indicator of the probability that a recession begins within 12 months has moved up from 30% on May 5 to 34% last week to 36% today," JPMorgan's Jesse Edgerton wrote. "This marks the second consecutive week that the tracker has reached a new high for the expansion."
JPMorgan's proprietary model considers the levels of several economic indicators, including consumer sentiment, manufacturing sentiment, building permits, auto sales, and unemployment.
JPMorgan notes that nonfarm payrolls is actually not part of the model. But the unemployment rate is. Interestingly, a low unemployment rate can be considered an ominous sign.
“The unemployment rate enters the model in two ways," Edgerton explained. "As a near-term indicator, we watch for increases in the unemployment rate that occur near the beginning of recessions. So this morning's move down in the unemployment rate lowered the recession probability in our near-term model. But we also find the level of the unemployment rate to be one of the most useful indicators of medium-term recession risk. So the move down in unemployment raises the model's view of the risk of economic overheating in the medium run and raises the 'background risk' of recession."
Indeed, recessions begin when things are very
good. It's only when reports come in that the data has turned that we
realize we've been in a recession.
Even Warren Buffett will tell you that a recession will inevitably come. For him, that won't be for a while.
But if it turns out that the recent slew of disapppointing data becomes a trend, the bulls may be forced to change their tune.
Global manufacturing has stalled
Even Warren Buffett will tell you that a recession will inevitably come. For him, that won't be for a while.
But if it turns out that the recent slew of disapppointing data becomes a trend, the bulls may be forced to change their tune.
–
Sam Ro is managing editor at Yahoo Finance.
Read more:Global manufacturing has stalled
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