From Carpe Diem:
The chart above shows University of Oregon economics professor Jeremy Piger’s “Recession Probability Index” from January 1990 to November 2012, based on the 4 monthly variables used by the NBER to determine U.S. recessions: 1) non-farm payroll employment, 2) the index of industrial production, 3) real personal income excluding transfer payments, and 4) real manufacturing and trade sales.
According to Professor Piger, “Historically, three consecutive months of recession probabilities exceeding 0.8 (see graph) has been a good indicator that an expansion phase has ended and a new recession phase has begun, while three consecutive months of recession probabilities below 0.2 has been a good indicator that a recession phase has ended and a new expansion phase has begun.”
Based on an update yesterday, the…
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