NBER’s Recession Indicators And Gold

The question is not ‘if’ but ‘when’. This is what more and more analysts think about the US recession. We invite you to read today’s article about the NBER’s recession indicators and find out whether the economic slump is really coming soon – and what it all means for the gold market.

Talks about a possible economic slump are getting louder. More and more analysts forecast the US recession by 2020. For example, according to December JP Morgan’s “real-time quant monitor”, the risk of a recession jumped to 35 percent, the highest in series history and up from 16 percent back in March 2018. Similarly, the respondents to the January CNBC Fed Survey put the probability of a recession in the next 12 months at 26 percent, the third straight increase and the highest since January 2016. And according to the February 2019 Wall Street Journal Economic Forecast Survey, the odds of recession starting within the next 12 months was about 25 percent, the highest level (with the exception of January 2019) since October 2011 and up from just 13 percent last year. In Reuters poll, the median probability of a recession in the next year rose from 20 percent in January to 25 percent in February. The outlook for 2020 is even dimmer, as the odds of recession over the next two years is 40 percent. Last but not least, the Philadelphia Fed’s Survey of Professional Forecasters puts the odds that economy will be shrinking in a year’s time at 23 percent, the highest level since 2008.

OK, the expectations of recessions are rising. But how investors should know whether these gloomy forecasts will prove accurate? After all, almost nobody predicted the Great Recession. And, on the other hand, as Paul Samuelson joked, the stock market had predicted nine of the past five recession. Well, investors may just take them on faith. But much better idea is to analyze and sift data for some clues. This is what we do at Sunshine Profits: always base our analyses on real facts and the most recent data.

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If you enjoyed the above analysis and would you like to know more about the most important macroeconomic factors influencing the U.S. dollar value and the price of gold, we invite you to read the ...

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