The latest recession probability models forecast a higher recession probability across all time frames and include a 100% probability of an economic downturn by 2023. The previous model had that probability at 65% for the comparable period.
The new model includes more certainty than other forecasts, including a separate Bloomberg survey of 42 economists that puts the probability of a recession over the next 12 months at 60%, up from 50% a month ago.
The Bloomberg Economics model uses 13 macroeconomic and financial indicators to predict the chance of a recession in a range from one month to two years. The model forecasts the likelihood of a recession within 11 months at 73%, up from 30%, and the 10-month probability rose to 25%, up from a previous forecast of 0%.
Changes in the forecast were likely driven by tightening financial conditions, inflation that has yet to ease, and expectations of further interest rate increases from the Federal Reserve – all factors that economists say lend to the likelihood of a recession.
President Joe Biden has been persistently upbeat about the economy leading up to the November elections. The President has repeatedly said the US will be able to avoid a recession and has said that any downturn would be “slight.”
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