From Goldman Sachs (Milo, Struyven, Revisiting Recession Facts”) today:
We see the risk that the economy enters a recession in the next year at 30% in the US, 40% in the Euro area, and 45% in the UK. … Our subjective recession probabilities are significantly higher than the average 15% annual unconditional probability of advanced economies to enter a recession since the 1960s.
It’s important to recall, especially as some nowcasts suggest a negative reading for Q2 growth, that GDP numbers are revised. The first release is called an “advance” release because a substantial share of the inputs are estimated. Below are the various vintages of GDP, starting after the trough so as to better highlight recent revisions.
Interest rates still expected to rise, but at slower pace:
I recall a conversation sometime in May 2001, when on the staff of the CEA, where the topic was how all the indicators were all pointing toward avoiding a recession. Indeed, using the oft-cited rule of thumb of two-consecutive quarters of negative GDP growth, there was no 2001 recession (although there was by this criterion a period of about 2 years, 2002-04, when there was). Consider this graph of GDP, by different vintages:
IHS-Markit’s monthly GDP now down seven months. Some key indicators followed by NBER BCDC:
Probabilities from 10yr-3mo and 10yr-2yr spreads:
Month-on-month indicators down, particularly core PCE:
Year-on-year picture:
With consumption (nominal at 0.2% vs.0.4% consensus) and personal income May releases, we have the following snapshot of some key indicators followed by the NBER BCDC.