Economics
Fickle Markets Flash Recession Signs as Economists Say Keep Calm
- Stock-based measures are especially prone to false positives
- Market models that flash red today may turn green next week
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Market-based recession indicators are flashing red. To some economists, they’re better left ignored.
At the moment that’s easier said than done. Among a slew of gauges maintained by JPMorgan Chase & Co., one based on stocks and credit spreads puts the probability of a recession in the next 12 months at 50 percent, though it was at 70 percent two weeks ago. Another, based on the gap between long-term and short-term Treasury yields -- the so-called yield curve -- puts the figure at 46 percent, according to economist Jesse Edgerton.