Real Time Probability of recession 20.6%

Marcelle Chauvet, Professor of Economics at University of California, works on real time probability of recession. The research is published by CREFC, Centre for research on Economic and Financial Cycles. By real time, they mean a delay of 1 quarter. Findings in the report are better projection of economic health than NBER reports.

  • Probability of Recession in July 2010 is 20.6
  • Probabilities are below 50% since July 2009
  • Probabilities were below 10% since Nov 2009, but increased above 20% in the last 2 months

probability of recession

Few noticeable months were:

June 2009 to July 2009 when probability of recession fell from 69.4% to 41%, from October 2009 to November 2009 between which probability fell from 18.9% to 7.9%. Most depressing change since 2009 was between May 2010 and June 2010, probability of recession has increased drastically from 2.8% to 27%. This increase shows why the talks about QE2 has increased in recent days.

Details of the study and methodology can be found on http://sites.google.com/site/crefcus/probabilities-of-recession/real-time-probabilities-of-recession

Hitesh Anand

I am a post graduate from Newcastle University, UK. I like studying and analyzing economic data and financial health of world.

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