MarketWatch weekly recession gauge drifts lower

On the other hand, the New York Federal Reserve has a model currently predicting a 71% chance of a recession in the next 12 months, based on the level of yields of long-term bonds compared with short-term securities, a relationship known as the yield curve.

Commentary on recession this week

• Ian Shepherdson, chief economist at Pantheon Macroeconomics, in an interview with Bloomberg Television, said a recession was everywhere except the monthly jobs report. “If we look at the small business survey from the NFIB, that’s at recession levels; the official index of leading indicators —deep recession levels; ISM manufacturing — recession levels. Payrolls plus 250,000 a month – a real disconnect. That can solve itself in two ways. Either all the surveys can rebound magically or payroll can weaken, which I think is much more likely. The Fed has raised rates by 500 basis points in 15 months. Normally, that would be more than enough to push the economy into recession. I don’t think this time will be different. We just have got to wait a bit longer,” he said.

• Former Obama top economist Jason Furman in an interview on CNBC said: “The most forecasted recession in history hasn’t shown up.”

• “We expect the economy to enter a shallow recession beginning in the third quarter, which should be evident in labor market data by September,” said Aichi Amemiya, economist at Nomura Securities International.

• Michael Gapen, economists at Bank of America, has revised his forecast in favor of a later and softer downturn. “For 2024, we now expect fourth quarter-fourth quarter growth of 0.0% versus 0.9% previously. We think that growth could turn negative for two quarters in the first half of 2024. Our forecast is now as much a ‘growth recession’ as it is a ‘mild recession’,” Gapen said, in a research note.