A plunge in recent economic data puts the probability of a double-dip recession above 80 percent, according to modeling by Bank of America Merrill Lynch released Wednesday.
The toll on the U.S. debt downgrade, Europe’s woes and stock market volatility is hampering economic activity much more than anticipated earlier in the year.
A survey of manufacturing in the Philadelphia Federal Reserve region plunged to its lowest level since March 2009, according to the Fed last week. Consumer confidence is at its lowest level since May 1980, according to a Thomson Reuters/University Michigan survey released on August 12. A revision of this survey will be released Friday.
The Philly Fed puts a recession probability at 85.7 percent, while the consumer survey puts contraction chances at 80 percent, according to Bank of America’s probability model, which uses a so-called Bayesian technique that “tests if the economy is in a recession based on the interaction of variables that are associated with turns in the business cycle.”
“More timely consumer and business sentiment indicators dropped in August in response to a range of bad news,” said Michael Hanson, one of Bank America’s economists. According to their data, the Philly Fed has accurately forecast four of the last seven recessions.
Peter Schiff, CEO & Chief Global Strategist of Euro Pacific Capital agrees with Bonzer Wolf, “It’s a 100 percent chance,” he said, “In fact the recession might have already started.”
Ya think Hurricane Irene is going to improve the situation?