Probability of a U.S. recession in the near future…almost zero

Troubled Assets

recession probabilityMany people lately have been talking about another recession that is coming to the U.S. in the near future. This fear, it seems, is mostly coming from political uncertainty from the recent “fiscal cliff” to the more current federal budget cuts. While these events, along with public sector job losses, can certainly bring a headwind to the economy, will it cause another recession? According to the Smoothed U.S. Recession Probabilities model, the answer is no. This model, which is created and updated by University of Oregon professor Jeremy Piger and is used by the St. Louis Federal Reserve, predicts the likelihood of a recession. The grayed out areas are actual U.S. recessions. With exception to a few false minor jumps, this model appears to be very useful in predicting a U.S. recession.  According to its authors, its probabilities are generated “using monthly data on non-farm payroll employment  industrial production, real personal income…

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