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Economists Finally Admit, Odds Of A US Recession Are On The Rise

As the evidence, that the US economy is either in or near a recession, mounts (confirmed by a new cycle high in inventories-to-sales just today), it appears even the most ardent optimists are admitting the odds of a US recession are on the rise. As Bloomberg reports, for the first time in 14 months, economists year-ahead recession probability estimates rose (to their highest level in 2 years).

 

Whether it is the "facts"...

Such as all 6 regional Fed surveys flashing red...

 

 

 

 

Or Wholesale inventory-to-sales at cycle highs...

 

Or admissions by The Fed that everything is not awesome...

"Although U.S. economic data releases generally met market expectations, domestic financial conditions tightened modestly as concerns about prospects for global economic growth, centered on China, prompted an increase in financial market volatility and a deterioration in risk sentiment during the intermeeting period," Fed officials said in the minutes of their Sept. 16-17 gathering, released Thursday

Bloomberg reports that he probability that the world's biggest economy will enter a recession in the next 12 months jumped to 15 percent, its highest level since October 2013, according to economists surveyed Oct. 2-7 by Bloomberg.

The median had held at 10 percent for 13 consecutive months.

 

 

Concerns over China, and the potential spillover to other economies, have led economists to cut their third-quarter growth forecasts to 2 percent from as high as 3 percent in July. China also is worrying Fed officials, who cited it as a risk to their outlook for economic growth and inflation — so much so that they delayed what would have been the first increase in the benchmark interest rate since 2006.

 

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However, do not get your hopes up that "economists" have seen the light of reality, as Bloomberg notes:

In a separate survey, economists projected the U.S. won't enter a recession until 2019, after pegging it to 2018 in last month's survey.

And finally, to "guarantee" a US recession...

“The idea that the U.S. will go from a growth rate of 3.9%, as it was in the last quarter to two quarters of negative growth, is far-fetched,” says IMF chief economist Maurice Obstfeld in interview on Bloomberg TV. A 15% chance of a U.S. recession next year would be “high by my reckoning”