James Hamilton has been relying upon Unemployment data to model whether or not we are in a recession.
Friday’s release pretty much sent his model over the edge:
>
Recession Probability = 95%
source: Econbrowser
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James adds:
"Sure looks like a recession when you inspect a graph the unemployment rate,
doesn’t it? And it also looks like a recession from the perspective of a model
of unemployment dynamics that I published
in 2005. If you use that model to analyze the latest unemployment numbers,
you’d calculate the current probability of being in a recession at 95%.
If The US/Frannie company starts foreclosing on people (aka taxpayers foreclosing on themselves) will that increases the 95% chance of a recession into the high 90’s?
Based on some of the Chris Martenson stuff that you have posted, BR, I think we have been in a recession (or at least zero growth) for quite a while in real terms. The more relevant question to me is:
What is the probability of a real doozy of a recession, at least 1981 level (yeah I was there) or maybe even an early 1930s type affair? The kind of long, painful recession that people really need to plan for…
What is the probability of a real doozy of a recession, at least 1981 level (yeah I was there) or maybe even an early 1930s type affair? The kind of long, painful recession that people really need to plan for…
You hit the nail on the head there cnbc. Not by the remotest stretch of the imagination are we in 1930, but 1980-1983 is a very definite possibility when the economy essentially pays for all the sins of the previous ten years. I was there too. Last time it was squeezing inflation out of the system, this time it’s deleveraging an over extended financial system and consumer.
Barry, maybe I’m not sufficiently clever…
Why are you pointing almost everyday to different people crying “recession”? How does a official recession declaration will change our life and investments? It almost feels like you are anxious to proclaim us all we are/were in recession and say “I told you so”
BTW, Merrill Lynch’s David Rosenberg stated in January that employment data and economic history showed the US was in recession at the end of 2007.
Roubini predicts 12 to 18 months of recession, of a rather serious sort, perhaps similar to ’74 or ’82, but with lower unemployment. The question is when does / did the clock start running? With the questionable data we have been getting from the government, it is difficult to say. Should we say it started this quarter? Or Q1, or perhaps even Q4 of ’07?
FWIW, my guess is we haven’t really seen anything yet in terms of the overall economy (and the stock market), and we have about 4 quarters of deeper pain ahead.
That chart uses data after all revisions.
“the reason that the above graph seems to be able to identify recessions so clearly is that it uses the full sample of data available today to infer what was the situation at each historical date. If instead you try to base a call only on the data available at the time, the inference is much choppier.”
See:
http://www.econbrowser.com/archives/2008/09/unemp_filt_sep_08.gif
Barry,
How dare you interrupt the Monday Bailout Bash with a dose of reality-check!?!
“Why are you pointing almost everyday to different people crying “recession”? How does a official recession declaration will change our life and investments? It almost feels like you are anxious to proclaim us all we are/were in recession and say “I told you so””
You don’t need Barry to figure this one out. Good financial decisions require accurate assessments of economic conditions. Calling it “not a recession” in the face of data to the contrary is bad thinking, bordering on poor ethics – or even criminal behavior – when the positive spin induces people to make poor decisions. Not everybody can sift through the data and make deeply informed choices. I think everybody has the right to hear properly interpreted data.
USA Today McCain +10
Gallup McCain +5
Rasmussen McCain +1
I wonder what the futures are saying about McCain dropping Palin today?
One more point; I’m going to go on record here, and say despite all the Obama slam dunk talk by the MSM this year, he’s NOT going to win … in fact, this election is not going to be as close as the last 2.
Shock in America!
One more:
American’s are not going to hand the keys of the United States of America over to the democratic party, without someone in the White House as a counter to left-wing legislation.
We’ve been in a recession since the third quarter of ’07.
My clients range across many different industries. There have been numerous layoffs. Those who’ve been laid off have mostly found new jobs, though of those many have been at lower pay levels. Some have opted for retirement. The business owners I speak with are without question being squeezed. Imo, we’re no doubt in a recession. And as far as that’s concerned, I’d put my money on Buffett being correct: this recession will be longer and deeper than most believe.
Thanks – a very good post and he walks thru more models that test most of the questions of other commentators. I found the immediately preceding post debunking Shadstats and what is apparently a gross mis-understanding AND failure to investigate the CPI and how BLS goes about it. Tell us – would the credability of that post be of the same order as the recession post ? Here’s a quote:
“I’ve yet to find someone who has been able to reproduce the claims made by Shadow Government Statistics about the extent to which government agencies are grossly misreporting the U.S. inflation rate. Apparently, neither has the Bureau of Labor Statistics, as detailed in an article by BLS economists John Greenlees and Robert McClelland in the latest issue of Monthly Labor Review. There’s much more in the BLS article on this and related questions such as hedonic price adjustment and owner’s equivalent rent. Why do people continue to give credibility to an operation like Shadowstats? Now that’s something that I’d like to hear explained”
FRE and FNM downgraded from buy to sell this morning at Citi
New price target
FRE: $0.32
FNM: $0.31
https://www.citigroupgeo.com/pdf/SNA24302.pdf
Recession Probability = 95%(Of The People)
“American’s are not going to hand the keys of the United States of America over to the democratic party, without someone in the White House as a counter to left-wing legislation.”
Thanks for the laugh, Donny. I mean, here we are the day after Bush and his cronies socialized two gigantic companies, and you’re writing about Democrats being lefty? Wow.
As far as why this matters, I’ll add that not everyone has been reading TBP for months or years. My father-in-law has had his eyes opened since he first started reading Barry’s stuff a few weeks ago. CNBC apparently gives a rosier picture of the economy than Barry! Surprised me too.
As a practical matter, Barry’s posts helped me convince him not to take a flyer on Freddie and Fannie, and for that I’m grateful since it was real money that would have been lost.
Thanks, Barry, for relentlessly dealing in the reality based world!
Interesting. The Intrade futures market is more sanguine:
http://www.intrade.com/jsp/intrade/common/c_cd.jsp?conDetailID=508654&z=1220899058745
ONE MORE:
Zogby ~ McCain +4%
Hold on a moment. This wasn’t in the cards!
Hillary was right, Gawd Dammit!
“You best start believing in
ghost storiesrecessions Miss Turner… you’re in one!”@Donny: Like the other ignorant trolls, I’m sure you’ll disappear shortly after Nov. 4th.
Relax big guy. Long way to go in this thing. Pit Bull Palin hasn’t even faced the media yet. National polls are worthless. It’s the states polls that matter the most. There is a big hidden vote here that is going to turn out in droves to vote out the GOP (for better or for worse). Count on it.
Jeff M
That’s funny, I always refer to a “troll” as someone who starts shit in the blogospher, knowing they are safe from being discovered who they really are. Understanding that they are are not accountable for their comments. I love provocative debate, but hate the use of silly names, especially when there is no recourse to the flame thrower.
Do you understand where I’m going with this?
With that said, I highly doubt you would have the balls to say this to my face, Jeff M., “Like the other ignorant trolls”.
@Donny: My apologies for the uncivial comments but if you knew me at all (which you don’t and never will), you’d know that I WOULD indeed say this to your face if it was indeed my opinion and we were having a face to face discussion. So please spare me the faux machismo.
I’ve been a little perturbed by the events in our “free markets” lately, as if you couldn’t tell, but you’re right, my comments were indeed a little over the top if we for this site. To be honest, I don’t think it really matters anymore who wins in Nov. Both parties are contributing equally to the demise of this country right now.
First you say this, “but if you knew me at all … which you don’t and never will”, and then you say this, “that I WOULD indeed say this to your face”. Sure you would tuff guy, sure you would.
Now that was easy wasn’t it.
@Donny: I offered you an olive branch and apology. Can we please move on?
Jeff
I feel so much better now that you’ve offered an olive branch for calling me a “troll” — I’m gonna go out and treat myself to an ice cream.
You know what Jeff, if you disagree with someone, challenge them with words of passion, but leave the names out. Especially when there is no recourse for your words. It belittles you.
Jeff M. wrote, “I don’t think it really matters anymore who wins in Nov.”
Now the light bulb truly comes on. Welcome to one party Brazil Amerika.
@donny:
Reganomics: tax less, spend more, borrow the difference.
Unless you can convince me that McCain will not do the same then I’ll vote for somebody else, thank you very much. The experiment in supply side economics started by Regan is turning into a massive debacle. The Frannie shipwreck is a direct consequence of making it easy for big business to make money regardless of the consequences to the lower and middle classes. Don’t know if Obama is the answer, but this registered independent will not vote for McCain – especially after his lurch to the right as evidenced by his selection of Palin.
(sry Barry. I know this is only marginally related to the topic, though I believe the political side of the equation is highly correlated to the problem)
“Reganomics: tax less, spend more, borrow the difference.”
Don’t equate me to this BS. I am in favor of divided gov’t.
“Unless you can convince me that McCain will not do the same then I’ll vote for somebody else”
I’m not trying to convince you of anything. In fact, I could care less what you do.
I was simply reporting what the polls are now saying, and what I think will happen in November. Nothing more, nothing less.
There was really no need for you to call me a “troll”.
Stop assuming, stop jumping to conclusions and stop pigeon holing people.
@Donny: BobC didn’t call you a troll. I did (mainly because it was so off topic and troll-esque) and then apologized but apparently you’re still sulking about it. Time to get over it and move on please. Good grief. Sorry to get off topic, BR. My bad all around.
Psssst. If the question comes up “Is this person trolling?” and 15+ posts of back and forth later the issue has gone nowhere, you are, indeed, getting trolled.
Either that or you are both trolling each other and don’t even realize it… which… would be sad.