Recession Update

Following up on my blog post from back in January about the NYFed’s economic models [link to previous post]. Recall this critical statement from that report: “there is almost no possibility that the economy will be in recession by the middle of this year according to the Fed's model, which has accurately predicted the last 7 recessions, back to 1960.”

So here’s what’s in the news today, as the economic numbers for the exact middle of the year start coming to light. From CNN Money:

“Economic indicators index jump [sic] 0.6% in July according to the Conference Board, in the latest sign of possible recovery.

“An index of economic indicators rose in July for a fourth straight month, in another sign that the recession is bottoming…

“The Leading Economic Index rose 0.6% in July, after a 0.8% increase the previous month…

"The indicators suggest that the recession is bottoming out, and that economic activity will likely begin recovering soon…

“The Leading Economic Index is based on 10 components, six of which increased in July...

“This index reading is the latest sign of a nascent recovery. Earlier this month, the Federal Reserve released a statement that said the economy is "leveling out." The central bank cautioned that activity will remain weak in the near term, but it marked the Fed's most bullish assessment of the economy in more than a year.

Looking at the NY Fed’s data now, we’ve gone from a 40% likelihood of an upcoming recession in Nov 2007, to 4% in February 2009 (when I originally posted), and nothing higher than 1% probability since February. Projecting out into next year, the number drifts down to a 0% in April, 2010, then stays there to the end of the projection.

There is still much to be diligent about. The real estate issues are huge weights on the current economy. Nevertheless, things seem to be going as projected after all.