A recession is coming

There is no doubt that the economy is slowing.
The leading economic index fell in December, marking the fourth decline in five months.
Combine that with the inevitable stock market correction from a Bernie Sanders nomination, and you have a stalled economy by summer.

Last week an MIT study showed that the danger is considerable.

The MIT Sloan School of Management and State Street Associates took an interesting — albeit, somewhat creepy — new approach in a study that found there is now a 70% chance a recession will hit the U.S. within the next six months.

Researchers analyzed monthly changes among four indicators: industrial production, nonfarm payrolls, stock market returns and yield curve slope. The relationship between those four data points was then compared to historical data from 1916 on.
...
Researchers found that the unique index, they call the KKT Index of the Business Cycle, has risen “leading up to every recession so that the combination of its trajectory and level provides a reliable indicator of the likelihood of recession,” they wrote in the study.

The index’s latest reading showed the chance of recession was twice as high as growth over the next six months. The study found that when probabilities reached this high a level, a recession occurred 70% of the time.

“This level is driven primarily by two factors: weakening industrial production and the slope of the yield curve,” Kinlaw said.

The entire election conversation is about to change.

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Comments

you mustn't be so negative. Why, just cheer on that big old stock market, grab your red hat and have a beer, all will be fine if you just believe it will. s/

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17 users have voted.

Only a fool lets someone else tell him who his enemy is. Assata Shakur

Pricknick's picture

if a new president is sworn in during a major recession (and it will be major again) if they will go after those who created it.
Or will it be "We have to look forward" again?
The 1% would like nothing better than to say "We don't have the money for that."

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20 users have voted.

Regardless of the path in life I chose, I realize it's always forward, never straight.

Wally's picture

. . . and Willie Nelson's daughter were campaigning for Bernie today:

(sorry but it looks like a slow day for Bernie essays so rather than just let it slide and forget about it, I'm stickin' it here)

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18 users have voted.
Creosote.'s picture

@Wally
listening to Arlo Guthrie on a WBAI Bob Fass program late at night when musicians would come by the studio, apparently including someone they called Lampman (Dylan?). That was the era when the person I had a piece of paper with refused to step off the curb to join a war-protest march, yet I was so green it took years for me to find my way out.

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2 users have voted.
Shahryar's picture

I do the kind of work that means good income in even years and good enough (I guess) in odd numbered years. So I've been expecting 2020 to be a very big year.

At this point things are good, revenue to date is about equal to where we were last year in mid-March, but it's still lower than I expected. The first time I got caught in one of these recessions was 1992. I had time on my hands to enjoy learning to play golf. I would skip out around 3 pm and get in 9 holes. After 3 months or so I got passable at the game, holding my own when I would be sent out with strangers. However business was pretty bad and I hardly noticed it happening.

Well I don't know if 2020 is going to be like 1992 but I'm already a little uncomfortable. I really did think I'd have little time for fun but I've had 3 days off this week.

I'm going to have to market my business (which I hate to do...one of these days I'll write why that is) just in case things really are slowing down.

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12 users have voted.
Pricknick's picture

@Shahryar
I too enjoyed my days walking the links (never riding) to find a new way to hit that dasterdly dimpled ball. That was 40+ years ago.
Now, I only see the waste of water and land. I see why I should have always tried to hit the ball into the water hazzard or pond.

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15 users have voted.

Regardless of the path in life I chose, I realize it's always forward, never straight.

Shahryar's picture

@Pricknick

Too many are snobby. Public courses aren't too bad. Any place upscale is a horror show. Elitist cheaters whose idea of a good time is making smarmy comments to the young girls who drive refreshment carts.

The problem with golf on TV is the gallery, full of lunkheads. I also don't want to know about the pro golfers' political views. I can guess though.

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7 users have voted.
Pricknick's picture

@Shahryar

full of lunkheads

Don't support the lunkheads.

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4 users have voted.

Regardless of the path in life I chose, I realize it's always forward, never straight.

earthling1's picture

I got my first Bernie canvassers at the door. Youngsters in their early 20s, he in levis and blue shirt and she in a red windbreaker and wearing a black ballcap that read Make America something something Again. I couldn't read all of it because of the way her head was turned and I mis-interpreted it as a MAGA hat. I didn't want to answer the door, but earthling2 did.
She spun of her heels and said to me, "Bernie people".
I was pleasantly surprised.
I came to the door and we had a nice chat for about fifteen minutes.
They seemed a little surprised that an old fart like me was a Sanders supporter but we parted with smiles.
Great to see young people taking up the gauntlet for Bernie and the rest of us o'timers who can't get around as much anymore.
March 10th is our primary.

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23 users have voted.

After six years, still getting robo-calls from Marriot Hotels.
They're like herpes.

Pluto's Republic's picture

I couldn't believe Trump made it through his first year without the markets crashing.

I couldn't believe the markets would survive the whiff of a trade war.

I can't believe Trump would run for another term and have the markets crash while he was the President. I can't believe he would take the fall when he could pawn it off on someone else.

Unless he believes there's a way for a President to keep the markets going indefinitely.

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15 users have voted.
Pricknick's picture

@Pluto's Republic
is inflate the markets with bullshit.
It is a fertilizer after all.

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13 users have voted.

Regardless of the path in life I chose, I realize it's always forward, never straight.

k9disc's picture

that there is a recession coming too.

I can't believe that this has not been covered here at all, and I'm not willing to post about it because I fear my sources, who have been correct and ahead of the curve, won't stand up to the rigors of an internet argument with citations. The nutters are far more correct than any respectable news source these days...

I'm completely cool with it, BTW, I've gotten pretty good at accepting things that are beyond my scope, but I don't think I can deal with an intellectual argument about it.

Coming here and getting the political scuttlebutt has been nice, I'm trying to remain aware of my surroundings in the long term, in case I'm spectacularly wrong, but I'm leaning strongly to a massive disruption of life in the near term.

Reading this piece at this point in time with no discussion of supply chain disruptions is surreal.

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21 users have voted.

“Tactics without strategy is the noise before defeat.” ~ Sun Tzu

Pricknick's picture

@k9disc
of the undesirables.
Sooner, rather than later, mother is going to wash the world of the nastiness.
I hope nature rules before all of nature is gone.
We, the humans, suck.

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11 users have voted.

Regardless of the path in life I chose, I realize it's always forward, never straight.

earthling1's picture

@k9disc
examination of this outbreak.
ClubOrlov: A Most Convenient Virus
He makes a lot of sense in that it's not an engineered virus because it's not very effective and doesn't spread quickly enough.
Yet the Chinese are treating it like an act of war, possibly for practice and/or for prop. purposes.
I can't seem to get the link to work.
A good read anyway.

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2 users have voted.

After six years, still getting robo-calls from Marriot Hotels.
They're like herpes.

With the Fed magically creating hundreds of billions of dollars on a regular basis, and the stock market inflating as a result, a stock market downturn is apparently not in the cards. But wallpaperization of the currency is.

Imagine if the CPI included stock prices. Hasn't the DOW more than doubled during the Trump years? Wow, that's some serious inflation.

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13 users have voted.
Pricknick's picture

@tle
CRASH.
Only the suckers will burn.

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5 users have voted.

Regardless of the path in life I chose, I realize it's always forward, never straight.

The company is doing well right now but is expecting a "soft market". Probably should expect more cuts. But then some high tech companies try to avoid cuts in R&D so that when economy comes back they have new products rather than updated older products.

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3 users have voted.