There's a 70% Chance Of Recession In The Next Six Months, New Study From MIT And State Street finds

CNBC ^ | 02/05/20 | Pippa Stevens

[Enlightened1]

• 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 researches 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.

Looking at data back to 1916, the researchers said that the index was a reliable recession indicator since it rose leading up to every prior recession. They found that when the index topped 70%, the likelihood of a recession in the next six months rose to 70%.

[Enlightened1]

Remember June of 2008 we were hearing how strong the economy was, and then around August of 2008 the market crashed right before the election? That helped Obama get elected.

The housing bubble and the derivatives were blamed for it. I am not saying this had was not the cause of the liquidity crisis. Although I cannot help and wonder if the Fed helped tip it?

I am very concerned this could happen around July, August, September time period to blame President Trump who has kept us out of recession. We are currently in the longest sustained Bull market (10 plus years) without a recession or depression. We average a Recession every 6 years. Which is healthy. You cannot go straight up forever. Usually too when you go straight up, then you eventually come straight down.

The DNC, the Deep State, the Globalists and China all want President Trump to lose. I would not be surprise if the Fed tries to tip the election in their favor by sabotaging the economy right before the 2020 Presidential Election.

[Mr Ramsbotham]

Remember, these are scientists. [Snicker]

[goldstategop]

Democrats talking down the economy. That they need a recession to win says a lot about them than it does about Trump.

[Shadow44]

The coronavirus disrupting factories in China is a major problem. Trump should just lean into it and push to onshore supply chains in the name of national security.

[Brilliant]

Are these guys selling everything then?

[oh8eleven]

... there's a 70% chance that a recession will occur in the next six months.

Haven't I read this every six months since President Trump was elected?
Gheeze, don't the haters ever stop?

[nathanbedford]

More than a week ago I posted my view the Trump must get out in front of this virus because a failing economy is the only thing that can deny him reelection. The Democrats will try to hang the coronavirus on Trump as his Hurricane Katrina.

[Leep]

Predictions are like a-holes...
https://www.nytimes.com/interactive/2016/upshot/presidential-polls-forecast.html

[BrexitBen]

Wishful thinking on the part of MIT and NBC.

They’re really grasping for any straw that would prevent four more years of the current White House.

[Redleg Duke]

I am shocked that they didn’t include counting the hairs on Caterpillars..

[Eccl 10:2]

Agreed on all points. Well said.

The Liberal Globalists have tried everything else, and failed miserably. Their last chance is to tank the economy and the stock market, and they have many powerful tools available to do just that.

They would sooner turn us into Venezuela than to have Trump re-elected.

[jeffc]

Just like how predicted that prosperity was “just around the corner” during the 0bama years....

[Tijeras_Slim]

"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,"

Phrenologists predicting the economy? Yeah, that works.

[silverleaf]

This

[LibWhacker]

PhDs in phrenology?

[max americana]

Wow. That’s exactly before the election. I see no bias here.

[existentially_kuffer]

I’ll be 100% in the 30% camp.

[trebb]

More like some “scientists” trying to come up with a scenario to give them the results they so desperately need and then claiming it is likely...the resiliency during the current coronavirus deal should tell us something.

[rb22982]

No one was saying the economy was strong in June 2008. Remember Bear Sterns bailout. S&P was down 15-20% from its highs less than a year ago in March 2008. People were in denial still a recession was likely, though, in early 2008.

The only reason we'll have a recession in the next 6 months would be this coronavirus crashing the Asian economies and spreading over here.

[Don W]

Phrenology as an economic tool? They really are desperate to damage the President, aren’t they?