There's a 70% chance of recession in the next six months, new study from MIT and State Street finds

[Quixote1818]

If it's going to come, PLEASE come by October!

PUBLISHED WED, FEB 5 202012:20 PM EST UPDATED WED, FEB 5 20204:13 PM EST
Pippa Stevens
@PIPPASTEVENS13

KEY POINTS
A new study from the MIT Sloan School of Management and State Street Associate says there’s a 70% chance that a recession will occur in the next six months.
The researchers used a scientific approach initially developed to measure human skulls to determine how the relationship of four factors compares to prior recessions.
The index currently stands at 76%. Looking at data back to 1916, the researchers found that once the index topped 70%, the likelihood of a recession rose to 70%.

There’s a 70% chance that a recession will hit in the next six months, according to new research from the MIT Sloan School of Management and State Street Associates.

The researchers created an index comprised of four factors and then used the Mahalanobis distance — a measure initially used to analyze human skulls — to determine how current market conditions compare to prior recessions.

“The Mahalanobis distance was originally conceived to measure the statistical similarity of the values of a set of dimensions for a given skull to the average values of those dimensions for a chosen group of skulls,” the researchers explained.

It measures the distance between a point and a certain distribution.

Using this principle, the researchers analyzed four market factors — industrial production, nonfarm payrolls, stock market return and the slope of the yield curve — on a monthly basis. They then measured how the current relationship between the four metrics compares to historical readings.



More: https://www.cnbc.com/2020/02/05/70percent-chance-of-recession-in-next-six-months-study-from-mit-and-state-street-finds.html

[democratisphere]

1. Get ready for another drumpf tax cut for the wealthiest later this year.

[Zolorp]

2. It has to start in the House.

He can talk about tax cuts. They will never see the light of day in the well of the House.

[Wellstone ruled]

3. I think we may all ready be passed the starting point.

Couple of things kind of jumped out yesterday. One was the continued Retail Stores closing,ATT&T axing 37k people in less than a year. Auto Manufacturing has dumped almost twenty Models for this year,and understand another dozen for the 2021 year. The real big thing is the amount of loose Cash drawing all most zero interest,no one is borrowing for R&D or Plant and equipment.

[Quixote1818]

7. I hadn't seen this but the yield curve is inverting again

https://seekingalpha.com/article/4321235-xlf-looming-yield-curve-re-inversion-suggests-underweighting-financials

[Wellstone ruled]

8. Suppose to happen before Tueday.

Noticed Powell is keeping the Repo Window open indefinitely and he is taken any type of Bonds in lieu of cash. So the Fed is loading up again with Junk.

[doc03]

4. WTF that's nuts

[ChoppinBroccoli]

5. I Don't Know Much About Economics, But I Was Told By Someone Who Does..........

............that one of the first and most reliable signs of an impending economic downturn is a slowdown in the trucking/transportation industry. That happened a couple of months ago.

Does it make me a bad person that I'm rooting for a recession to hit over the summer?

[tinrobot]

6. Not bad at all. It will happen eventually.

Might as well hope it happens on his watch.

[Vogon_Glory]

9. If a recession has to happen this year, I hope

It happens while the voters have a chance to dump Orange Julius and not have to suffer four more years of Trump/Pence.

[onenote]

10. how many times has an imminent recession been predicted?

Most of the economic forecasts I see on DU turn out to be BS.

[ScratchCat]

11. I don't think it will happen in the next six months

but a recession of some sorts is certainly imminent. It probably wont come into fruition this year, but by mid 2021, I think it will be undeniable. Others have pointed out the inverted yield curve, shipping down, requests for commercial equipment loans down, retail job cuts, etc.. And the worst part is, there are only minimal number of things that could be done to lessen its effects.

[wishstar]

12. I expect to see another interest rate cut by summer

At the slightest hint of a slowdown in numbers either this quarter or next, Fed will lower rates again and not wait until closer to election in fall to keep economy and stock market propped up. It worked to stimulate economy last year when the numbers were indicating slowdown.