Market-Implied Probability of a Recession Starting Within 1 Year and Market-Implied Probability of Being in a Recession Concerns about a recession are like those pesky weeds in your garden: they never really go away, but at least the market thinks it’s finally time to trim them back—U.S. recession risk is at its lowest in two…
U.S. Recession Probability The consensus likelihood of a recession in the United States over the next year is estimated to be around 25%, which points to a moderate risk of an economic downturn. Image: Deutsche Bank
Recession – NFIB Sales Expectations Optimism among U.S. small business owners regarding future sales has significantly declined, with many anticipating a drop in revenues over the coming months. Image: Real Investment Advice
Estimated U.S. Recession Probability Goldman Sachs has reduced its U.S. recession forecast probability from 20% to 15% based on recent macroeconomic data, especially a strong employment report that surpassed expectations. Image: Goldman Sachs Global Investment Research
U.S. Recessions – 6-Month Fed Funds Minus Current Fed Funds Rate Historically, U.S. recessions have often followed periods of bearish short-term interest rates, particularly when the Fed cuts rates in response to economic downturns or signs of slowing growth. Image: BofA Research Investment Committee
U.S. 10Y-2Y Yield Curve and Recessions When a recession is avoided, an un-inversion in the 2s10s U.S. Treasury yield curve may suggest a favorable outlook for U.S. stocks. Image: Goldman Sachs Global Investment Research
When Will the U.S. Economy Go into Recession? The majority of FMS investors do not currently expect a U.S. recession in the next 18 months, while only 8% foresee one in the second half of 2024 and 35% predict a recession in 2025. Image: BofA Global Fund Manager Survey
NBER Recession Dating vs. Market Realization As a reliable predictor of U.S. recessions, the S&P 500 often peaks and declines before the National Bureau of Economic Research (NBER) formally acknowledges a recession, generally within 6 to 16 months. Image: Real Investment Advice
Median Non-Farm Payrolls in the 12 Months Before and After the Start of a U.S. Recession Maintaining payroll growth above +100,000 jobs per month is viewed as a crucial buffer against recession fears. If this trend continues, it may provide some reassurance about the U.S. economy’s trajectory in the coming months. Image: Deutsche Bank
Recession – U.S. Real Retail Sales Over the past two years, real retail sales in the U.S. have remained weak, indicating a persistent sluggishness in consumer spending. Image: Real Investment Advice
S&P 500 Going into a Sahm Rule Recession Indicator Trigger Event The recent triggering of the Sahm Rule indicator has diverged from the typical behavior of U.S. equities seen in the lead-up to a recession. Investors should be cautious before drawing conclusions about a potential U.S. recession. Image: BofA Predictive Analytics