by Bill O’Grady & Mark Keller
Summary—High Probability of Recession:
- The economy is facing three simultaneous problems:
- A public health crisis—COVID-19 and the economic impact of containing it;
- An oil price war and a regional economic slump;
- Rapidly rising financial stress caused by (a) and (b) along with underlying unresolved issues.
- We estimate the odds of recession are now 80%, although there is a slim chance the economy avoids a recession.
- There is very little economic data to confirm the economic slump, but the anecdotal evidence is near overwhelming;
- Given the timing of economic reporting, clear evidence of a downturn won’t be available for several weeks;
- This report will update our thoughts on how the next few months will unfold.
- The content of this report:
- An overview of how recessions look compared to expansions;
- A discussion of the three threats the expansion faces;
- The market impact of these three threats.