Key Highlights
- Bloomberg Economics model of determining recession this year in US now stands at 53%
- This 53% predictor is highest reading for recession probability since US exited Great Recession in 2009 and significantly higher than this reading of 24% last month
The Bloomberg Economics forecasting model for recession developed by Bloomberg economists Eliza Winger, Yelena Shulyatyeva, Andrew Husby and Carl Riccadonna is now showing a 53% chance of recession within 12 months.
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This model incorporates data across economic conditions, financial markets and gauges of underlying stress and reflects the deterioration in financial conditions that began mid-to-late February as the coronavirus pandemic spread and stocks plummeted. On top of the whole mess has been the collapse of OPEC talks and sinking oil prices.
Naturally, projections of an eminent recession are partly based on weekly unemployment benefit filings as well as the spread between three-month Treasury bills and 10-year notes. By March 26, filings for unemployment benefits shot up to an unprecedented 3.3M and the Federal Reserve has since taken equally unprecedented action per interest rates and its announcement to buy unlimited Treasury bonds and mortgage back securities to help the economy hit some sort of equilibrium. On April 2, and additional 6.68M now jobless people in the US filed unemployment insurance benefits to a total of some 10M in just two weeks.
These above elements were obviously premature to this latest 53% projection by Bloomberg Economics. We will be awaiting this Bloomberg projection next month once the data catches up with the blizzard fast economic happenings.
Thanks to BloombergNews’ Reade Pickert, Yue Qiu and Alexander McIntyre.
Also read: Key Aspects About Unemployment Benefits, Podcast: Your Top 8 Questions Answered | Housing, Economic Crash..Now What?, CARES Act Mortgage Bailout Complete Chaos?
