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Tuesday, February 05, 2019

Update: The Endless Parade of Recession Calls

by Calculated Risk on 2/05/2019 01:11:00 PM

It was over three years ago that I wrote: The Endless Parade of Recession Calls. In that post, I pointed out that I wasn't "even on recession watch". Here is a repeat of that post with a few updates in italics.

Note: I've made one recession call since starting this blog.  One of my predictions for 2007 was a recession would start as a result of the housing bust (made it by one month - the recession started in December 2007).  That prediction was out of the consensus for 2007 and, at the time, ECRI was saying a "recession is no longer a serious concern".  Ouch.

For the last 6+ years [now 9+ years], there have been an endless parade of incorrect recession calls. The most reported was probably the multiple recession calls from ECRI in 2011 and 2012.

In May of [2015], ECRI finally acknowledged their incorrect call, and here is their admission : The Greater Moderation

In line with the old adage, “never say never,” [ECRI's] September 2011 U.S. recession forecast did turn out to be a false alarm.
I disagreed with that call in 2011; I wasn't even on recession watch!

And here is another call [from December 2015] via CNBC: US economy recession odds '65 percent': Investor
Raoul Pal, the publisher of The Global Macro Investor, reiterated his bearishness ... "The economic situation is deteriorating fast." ... [The ISM report] "is showing that the U.S. economy is almost at stall speed now," Pal said. "It gives us a 65 percent chance of a recession in the U.S.
Clearly that forecast was incorrect.   And there were many more at the end of 2018. 

More recently Looking at the economic data, the odds of a recession in 2016 [written in late 2015] are very low (extremely unlikely in my view).  [My view now: a recession in 2019 is very unlikely]. Someday I'll make another recession call, but I'm not even on recession watch now.

[I'm still not on recession watch!]